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WHITE PAPER ON



AN INTEGRATED APPROACH FOR PROMOTION AN INTEGRATED APPROACH FOR PROMOTION OF INDIAN
TOURISM OF INDIAN TOURISM

Prepared for THE BOMBAY CHAMBER FOR COMMERCE & INDUSTRY BUSINESS CONSULTING GROUP



309/310 Mhatre Pen Bldg, Senapati Bapat Marg, Dadar (West) Bombay 400 028 Phone : (22) 430 1745,
437 1823, 431 3914 Fax : (22) 430 1655 E-Mail : bomoff@businessconsultinggrp.com Website :
www.businessconsultinggrp.com
About Bombay Chamber

The Bombay Chamber of Commerce & Industry is one of the oldest Chambers of Commerce in the
Country. The Bombay Chamber for over 165 years of its existence, since its inception in 1836, has been
serving Trade & Industry. It is well respected for its balanced and studied approach to matters pertaining
to development of trade and industry, promotion of government – industry inter-linkages and for
pursuing radical trade policies. Bombay Chambers’ membership comprises predominantly the most of
large and medium size companies from manufacturing and service sectors, leading banks and financial
institutions and the multinationals having their corporate headquarters in Mumbai. The Chamber’s
membership, therefore, contributes almost a quarter of India’s Gross Domestic Produce in
manufacturing and service industries.

Bombay Chamber of Commerce & Industry 1 An Integrated Approach for Promotion of Indian Tourism
INTRODUCTION

The Bombay Chamber seeks to reflect the views, perceptions and interests of their constituents in a
proactive and constructive manner. In recognition of its changing role, the Chamber initiated debate on
various important issues, such as future direction of economic reforms and integrated approach for
promoting of Indian Tourism. The Tourism Committee of the Bombay Chamber of Commerce and
Industry therefore, engaged the services of Business Consulting Group to develop a White Paper on
Indian Tourism The objective of the White Paper is to generate action in the Government and the
Industry in terms of policy and operational initiatives that will help promote the growth of Indian
tourism - inbound as well as domestic tourism. Several reports have lamented the low share of India in
world tourism and have made meaningful suggestions. Nothing much has changed on the ground
despite all that. It is expected that the Bombay Chamber’s White Paper which that offers practical
direction for change will spur action for change and growth.



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
ACKNOWLEDGEMENT

. Bombay Chamber would like to express its gratitude and sincere thanks to the Sponsors of this White
paper:



The Indian Hotels Co. Ltd. Thomas Cook (India) Ltd Kuoni Travel (India) Ltd. BCC&I Trust for Economic &
Management Studies

Secretariat: Bombay Chamber of Commerce & Industry Mr. L.A.D’Souza, Executive Director Ms. Kavita
Sharma, Deputy Director Bombay Chamber of Commerce & Industry Oficial Travel Agents Jet Airways
India Pvt. Ltd. Consultants: Business Consulting Group Mr. Raj Nair, Chairman Mr. Utpal Ashar,
Consultant



3



An Integrated Approach for Promotion of Indian Tourism
ADVISORY COMMITTEE

Mr. R. K. Krishna Kumar, Managing Director, The Indian Hotels Co. Ltd. Mr. Ranjit Malkani, CMD, Kuoni
Travel India Ltd. Mr. Adi Katgara, Chairman, Travel Corporation of India Mr. Ashwini Kakkar, MD,
Thomas Cook India Ltd., Mr. Lalit Sheth, CMD, Shree Raj Travels, Mr. Reyaz Mama, Director, Ratan
Mama Consultants Mr. Vishambher Shewakramani, Managing Director, Ras Resorts, Mr. Anil Kaul,
General Manager, The Oberoi Hotels, Mr. Yogesh Dhawan, General Manager, The Regent Mumbai. Mr.
Rajan Divekar, Director, A.F. Ferguson & Co., Mr. P.J. Crasta, Sr. General Manager, Jet Airways India Pvt.
Ltd. Mr.Ajoy Misra, Sr. Vice President The Indian Hotels Co. Ltd. ( Chairman, Tourism Committee) Mr.
Zubin Karkaria, Sr. Vice President & COO, Kuoni Travel India Ltd. ( Co-Chairman, Tourism Committee) Mr.
U.K. Mukhopadhyay, Secretary,Department of Tourism, Maharashtra Mr. Ashish Kumar Singh,
Managiong Director, MTDC Mr. M.M. Jain, Asst. Director, Govt. of India Tourism Office Mr. B.B. Gomre,
Asst. Director Govt. of India Tourism Office, Mr. Alok Awasthi, Jt. Director, MP Tourism Development
Corporation Mr. Bimlesh Kumar, Regional Manager, UP State Tourism Development Corporation



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
CONTENTS

Executive Summary Action Plan - Government Action Plan - Industry Why India Needs Tourism Indian
Tourism Industry - Growth Analysis An Integrated Strategy - Strategic & Operational Initiatives -
Influence & Facilitate Tourist Decisions - Branding & Marketing Strategy - Facilitate Tourist Arrival, Stay
& Movement - Tourism Infrastructure - Pricing & Taxation Organisational Mechanism for Development
of Tourism

Bombay Chamber of Commerce & Industry 5



1 11 15 18 26 37 38 43 49 56 59 61

An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY

Why India Needs Tourism Indian Tourism Industry - Growth Analysis - Factors Affecting Tourism Industry
in India An Integrated Strategy : Strategic & Operational Initiatives Influence & Facilitate Tourism
Decisions Branding and Marketing Strategy Facilitate Tourist Arrival, Stay & Movement Tourism
Infrastructure Pricing & Taxation 1 2 4 5 6 7 8 9 10



Operational Mechanism for Development of Tourism



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



Why India Needs Tourism

• • Tourism is the largest sector in the worldwide exports of goods & services. At over $ 500 billion, it is
larger than automotive, chemicals, fuels and every other sector. Recognise Enormous potential of the
Hotel, Travel, Entertainment, Transport and other allied industries. As per WTTC, the travel and Tourism
economy in India which includes all the above stated industries as well as supporting industries currently
account for 17.4 million jobs in India or 5.8% of total employment. This has a potential to rise to 25
million jobs or 6.8% of total employment by 2010. Developing economies are benefiting more than
developed economies because inbound travel dollars exceed outbound travel dollars for them, but in
India’s case the travel account balance per year has declined from $ 1.5 billion in 1997-98 to $ 0.9 billion
in 1999-2000 because the increase in forex outflow due to outbound travel is much higher than the
increase in forex inflow on account of inbound travel. The total world tourist arrivals is 664 million
tourists and the dominant destinations are Europe & America. South Asia gets a very small share. Only
some part of it can be addressed by India because it is a long haul destination for the key countries and
long haul tourism has only 18% share of the world tourism pie. International arrivals into any country
depends upon the level of it’s International trade. India’s low level of international trade limits its
inbound tourism potential further. But its ability to fully exploit the tourism potential will depend upon
its ability to develop customer segment focussed strategies through co-ordinated approach by the
government, hotel, airlines, tour operators etc. Other countries like Thailand, Brazil, Turkey, etc.
demonstrated this. Tourism industry can boost India’s GDP and forex earnings significantly 7 An
Integrated Approach for Promotion of Indian Tourism



•



•



•



•



Bombay Chamber of Commerce & Industry
EXECUTIVE SUMMARY



Indian Tourism Industry - Growth Analysis

• International tourists arrival in India was 2.66 mn according to published statistics, growing at 4%
CAGR over the past decade but stagnated somewhat over the last 4 years. Though India’s earnings from
inbound travel have shown a growth in rupee terms, they have stagnated in absolute dollar terms
during the past 4 years. • In India, growing income over the years has led to an increase in consumption
expenditure on recreation, education and cultural services, transport and communication increasing
from 24% to 28%. This and the growth in disposable income has resulted in the total domestic tourist
movement in India to more than double over a period of 7 years. Growth in disposable incomes is also
one of the major factors responsible for increase in the number of outbound tourists from India. The
number of outbound tourists will increase further, especially due to lack of availability of well developed
and reasonably priced tourist destinations within the country. Tertiary benefits of tourism are huge. The
trickle down benefits of the travel & tourism industry on the economy go beyond what is apparent. The
Satellite Accounting figures of WTTC suggest that the $ 11.33 bn Travel &Tourism industry in India
(2000) supported a $ 23.8 bn Travel & Tourism related economy. Unless the Government and Private
sector come together and develop a clear strategy, India will continue to be ignored as an interesting
long haul destination by leisure and business travelers and India will become, gradually one of the few
developing countries with a negative travel account balance.



•



•



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



Factors Affecting Tourism Industry in India

• Leisure Tourists : India’s low leisure tourist numbers (inbound as well as domestic) could be attributed
to: • Inadequate Promotion & Marketing Poor Infrastructure Restrictive Policies Other Obstacles



Business Tourists: India’s low business tourist numbers (inbound as well as domestic) could be
attributed to: Inadequate Magnets to attract business groups and facilities for business conventions
Attitude towards potential business investors Inadequate Promotion & Marketing Poor Infrastructure
Restrictive Policies



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Strategic & Operational Initiatives

• Put Tourism on the Concurrent List of the Constitution of India • Government should declare Tourism
as a ‘Priority Industry’ like Information Technology • Government should increase outlay on Tourism -
India spends only 0.9% of GDP on Tourism compared to 4-9% in most other countries. • Lay down a
master plan to implement planned and phased development/ upgradation of infrastructure and areas of
tourism potential with private sector participation • Policy initiatives for the same • Aimed at improving
the operational efficiency by focussing on infrastructural constraints and optimising existing
infrastructure with the available resources.



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Influence & Facilitate Tourist Decisions

• • • • • Focus on select target countries, which account for most of the outbound tourists and most of
the world tourism expenditure e.g. UK, USA, Germany, Japan, France, & Italy Need to have detailed
market research data to identify socio-economic profile, their tourism needs, etc. For these countries
deploy a country specific Push-Pull Strategy to influence their choice of holiday destination Target Non
Resident Indians (NRIs) too because they are large in number and they can influence nonIndians to visit
India Promotion through multiple channels. Several suggestions have been made in the report, ranging
from Indian restaurants, airlines to creation of an interactive website for Indian tourism



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Branding & Marketing Strategy

• Indian Tourism needs Branding - Several countries have specific themes to attract tourists and their
entire marketing strategy and offerings are in sync with the theme. e.g. Land of Smiles (Thailand), 1%
water, 99% fun (Mauritius), etc. The ‘Experience India’ project is a step in the right direction. A theme
could emerge out of it. Develop ‘National Tourism Logo’ that can be used by industry players in their
communication and publicity materials. Introduce the concept of ‘Debit Cards’ like prepaid Phone cards
to facilitate tourist spending. ‘Interactive website’ which could be made to pay for itself through fees
from industry participants Quality information dissemination through contemporary & innovative means
using multiple channels e.g. Select Indian restaurants in target markets, airlines and other channels. Co-
marketing/ Co-Selling with key travel operators Outsourcing promotion and marketing activities to
private players based on target fulfillment criteria The product on offer need to be packaged for relevant
customer segment in the target countries and the various industry participants in the value chain must
co-ordinate their efforts to provide a seamless and consistent experience which is congruent with the
theme.



•••••••



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Facilitate Tourist Arrival, Stay & Movement

• Visa procedures are seen as a hindrance. Countries competing with India for tourists provide visa on
arrival (SriLanka, Maldives, Thailand, Nepal, Seychelles, etc.). India too should provide visa on arrival for
certain categories of tourists/ for specific duration. Reputed inbound travel operators to be permitted to
bring in group of tourists without any visa, subject to submission of guarantee by concerned operator By
categorising the countries, India could do away/ facilitate visa requirements for certain countries
Upgrade Tourism Infrastructure and address areas of prime concern (e.g. safety, security, language,
cleanliness, hygiene quality of tour guides, etc.) in order to make the tourists’ experience memorable
Eliminate various irritants eg. discriminatory monument entry fee for foreign tourists



••••



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Tourism Infrastructure

• The Government does not have adequate finance for the upkeep of the 3700 protected monuments
and 10,000 unprotected monuments. The annual budget of Rs.156 crores amounts to a paltry sum of
Rs.7600 per year per monument. Suggestions: - involve the private sector for upgrading and maintaining
the key monuments of tourist interest. 38 have been identified. The Government need not spend money
at all on these, e.g. The Indian Hotels Group has adopted the Taj Mahal - use Government funds to
upgrade other protected monuments • Remove procedural bottlenecks for creation of tourism
infrastructure. This has restricted the supply of facilities, reduced competition and made India a more
expensive tourist destination than several places in S. E. Asia which offer superior facilities Since the
infrastructure in the whole country cannot be upgraded simultaneously, identify and develop certain
areas as ‘Special Tourism Circles’ which can be tendered to bidders from the private sector just like
other infrastructure is, e.g. Telecom



•



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



An Integrated Strategy : Pricing & Taxation

• It will help if the State and Central taxes are rationalised taking into account the fact that wide
difference between states create operational problems and high taxation which pushes up the pricing
dampens the the growth of tourism. Tourism is price elastic. Tourism earnings could be deemed as
Exports to the extent of the Net Foreign exchange earned Tax Deferment in case of ‘Currency
Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned can be provided to encourage
investment in tourism.



••



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
EXECUTIVE SUMMARY



Organisational Mechanism for Development of Tourism

Create an apex professional body modeled along the lines of ‘NASSCOM’ could be called ‘National
Association for Tourism Promotion’ (NATPRO) or whatever. The Council of the ‘NATPRO’ could include
senior representatives of associations of all the tourism related industries. ‘NATPRO’, can co-ordinate
and act as prime catalyst to promote the interest of the tourism and related industry. ‘NATPRO’ would
act as the advisory, consultative and co-ordination body for the tourism industry through
representatives in various committees of the Government of India including various Ministries like
Ministry of Tourism, Ministry of Finance, Ministry of External Affairs etc. ‘NATPRO’ will be a private
sector initiative with Government support.



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
ACTION PLAN

Action Plan - Government Action Plan - Industry 11 15



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
ACTION PLAN - GOVERNMENT



A. Strategic Initiatives by the Government

1. Recognise Tourism as ‘Priority Industry’ for the Country

Government should declare Tourism as ‘Priority Industry’ like Information Technology



2. Put Tourism on the ‘Concurrent List’ of the Constitution of India



3. Give ‘Tourism’ the desired importance in economic and budgetary planning process

Government should increase outlay on Tourism - currently, India spends 0.9% of GDP on Tourism
Government Travel & Tourism Expenditure (%of the total GDP)

India China Spain Singapore China Malaysia 0.9 3.8 9.5 9.1 7.4 5.1 France Sri Lanka USA UK Thailand
Germany 4.7 4.0 3.9 2.9 2.6 3.3



4. Recognise Enormous Employment Potential of the Hotel, Travel, Entertainment,

As per WTTC, the Travel & Tourism economy in India which includes all the above stated industries as
well as supporting industries currently account for 17.4 mn jobs in India or 5.8% of total employment.
This has a potential to rise to 25 million jobs or 6.8% of total employment by 2010. Bombay Chamber of
Commerce & Industry 18 An Integrated Approach for Promotion of Indian Tourism



Transport and other Allied Industries.
ACTION PLAN - GOVERNMENT



5. Lay Down a Master Plan to implement planned and phased Development/Upgradation of
Infrastructure and Areas of Tourism potential with Private sector Participation Develop ‘Special Tourism
Circuits’ (like Telecom circles)

ϖ Identify and create ‘Special Tourism Circles’ based on categorisation of regions depending upon
selected parameters of infrastructure development index and potential. ϖ These areas could be
tendered for infrastructural development to bidders from private sector, on similar basis as ‘Telecom
circles’ ϖ Develop a master plan through a Special Area Development Authority constituted for the
region identifying boundaries for notification and development ϖ Provide basic infrastructure in terms
of roads, transport network, electrical grids, water supply etc. ϖ Facilitate private investments through
fiscal incentives, removal of restrictions preventing foreign ownership and leasing of infrastructure
through special legislation in these areas.



6. Taxation Policy

ϖ ϖ ϖ Introduce uniform taxation across the States and do away with multiple taxation. Tourism
Industry be deemed as Exports to the extent of the Net Foreign exchange earned Tax Deferment in case
of ‘Currency Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned. A fixed
percentage of each years’ profit can be transferred to this reserve account, subject to a monetary limit
on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure. The annual
contribution to such reserve should be tax deductible at the time of transfer of amount to reserve
account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be released
on payment of tax. Bombay Chamber of Commerce & Industry 19 An Integrated Approach for
Promotion of Indian Tourism
ACTION PLAN - GOVERNMENT



B. Operational Measures as Components of the Strategy

1. Brand Indian Tourism Through Development of ‘National Tourism Logo’



Tourism needs Branding. There has to be a promise that appeals to the relevant population. Therefore,
India’s National Tourism Logo’ need to be developed which represents tourist interest in India.



2. Develop an integrated long- term strategy for Marketing

2.



ϖ Idetifying countries for targeting, ϖ Promoting India in the target markets identified based on a
concept of promotion for India aimed at creating an ‘Indian Tourism Brand’, through ‘Theme’ promotion
ϖ Develop ‘National Tourism Logo’ ϖ Adopt ‘innovative marketing strategy’ : ‘co-selling and co-
marketing with key travel operators’ ϖ Introduce the concept of ‘Dollar Tourism Debit Cards’, similar to
‘pre-paid telephone cards’ ϖ Facilitate tourist arrivals, movement & stay as well as keeping the tourist
occupied and interest. ϖ Strategically plan to attract investments in infrastructure

Bombay Chamber of Commerce & Industry 20 An Integrated Approach for Promotion of Indian Tourism
ACTION PLAN - GOVERNMENT



3. Recognise the Need for an Organisational Mechanism - ‘NATPRO’

ϖ Support the formation of ‘NATPRO’ (National Association for Tourism Promotion), a tourism industry
initiative based on the NASSCOM. ϖ Recognise ‘NATPRO’ as the single united voice of the tourism
industry Recognise NATPRO in the role of an advisory, consultative and coordinating body representing
the tourism industry by including representatives of NATPRO on the committees of various Ministries
concerning the tourism industry



4. Relax Visa Requiremnts

ϖ Relax visa requirements and facilitate unrestricted tourist movement (domestic as well as inbound)
involving removal of obsolete laws, restrictions and licence permits



5. Other Initiatives

ϖ Address basic areas of concern of tourist like security, language, safety, hygiene conditions in the
promotions as well as on the ground. ϖ Involve the private sector in the upgradation and maintenance
of heritage sites. Bombay Chamber of Commerce & Industry 21 An Integrated Approach for Promotion
of Indian Tourism
ACTION PLAN - INDUSTRY



Lobby with the Government for Tourism to be given a Priority Status

ϖ Tourism is world’s largest Export Industry but South Asia, & India in particular, gets a very low share.
India’s dismal performance is due to variety of reasons. It needs examination and analysis why the
implementation has been elusive and in creating an enabling mechanism for proactively implementing
the solutions.



Promote Establishing ‘NATPRO’ (National Association for Tourism Promotion)

NATPRO will be a tourism industry body, modeled on the lines of NASSCOM, as per the steps listed
below: - Draw up charter for ‘NATPRO’, complete all the legal and procedural formalities, develop the
organisational framework required and prepare a Business Plan - A few visionaries from the travel and
tourism industry should form an Interim Council - Recruit top flight professionals and set up the
elected / nominated Executive Council which replaces the Interim Council - Draw up a detailed long term
action plan - Present Bombay Chamber’s White Paper on Tourism to the PMO and if possible to a group
of key functionaries including Ministers from all the relevant ministries. - Through ‘NATPRO’, work in
close interaction with the government in the role of an advisory, consultative & coordinating body for
the tourism industry. This could be through various activities aimed at fulfilling objectives laid down.
Bombay Chamber of Commerce & Industry 22 An Integrated Approach for Promotion of Indian Tourism
ACTION PLAN - INDUSTRY



Creation of ‘Special Tourism Circles’

Since it is impractical to raise the quality of infrastructure across the entire country, this paper suggests
the creation of ‘Special Tourism Circles’ around anchor destinations. The ‘Special Tourism Area’ would
have to be identified for development by evaluating & categorising various regions based on laid down
parameters indicating extent of infrastructure development and potential for further development.
Private sector may bid for infrastructural development, on a similar basis as ‘Telecom Circles’.



Develop Interactive Web-site for information



ϖ To help tourists select India as an attractive destination, decide on itinerary, city specific details to
decide on

specific activities, hotels to stay, the transport to book, etc. ϖ Interactive facility to query and get
information and action such as reservation etc. ϖ To be made available in different languages of target
countries. ϖ Such an initiative to pay for itself by subscription fees from industry participants (similar to
the concept of ‘Tata yellow pages’).



Maintenance & Development of Tourism Infrastructure

Actively participate in the maintenance & development of tourism infrastructure through investments in
tourism infrastructure, preservation of heritage sites by adoption etc.



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
ACTION PLAN - INDUSTRY



Theme Promotion - ‘Experience India’ & ‘India Tourism Logo’

Prepare a promotion campaign based on the theme and provide support to the government for its
promotion in target countries



Promotion of ‘Tourism Debit Cards’

ϖ

ϖ ϖ Private sector may bid for exclusive rights similar to the concept of pre-paid telephone cards and
credit cards Participants may give token discounts Cost may be recovered by way of advertisements



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM

Tourism & World Trade Travel Account Balance India’s Travel Balance World Tourism India: Long Haul
Destination Tourism Arrival vs. International Trade Tourist Arrival vs Country Size 18 19 20 21 23 24 25



Bombay Chamber of Commerce & Industry



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An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM Tourism & World Trade



Tourism has the largest share in the worldwide exports of goods and services

Worldwide exports of goods and services ($ bn)

600 500 400 300 200 100 0 Food Computer & Office eqpt. Automotive products Textiles & Clothing
Telecommunication eqpt. Tourism Mining products other than fuels Iron & steel Chemicals Fuels 9 503
7.5 443 399 6.6 5.9 344 5.1 331 283 4.9 4.2 8 7 6 5 4 158 2.3 141 2.1 3 2 1 0



% of total worldwide exports of goods and services



532 7.9



525 7.8



Ë Tourism is one of the five top export categories for 83 % of countries worldwide and the main source
of foreign currency for at least 38% of them. Ë For India, tourism earns over $ 3 bn but is the 4th largest
forex earner after gems & jewellery, garments, software.



Source : World Tourism Organisation



India should take a holistic view to encourage the growth of Tourism rather than view it as separate
pieces like aviation, hotels, airports, entertainment complexes, etc.

Bombay Chamber of Commerce & Industry 26 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM Travel Account Balance



Developing economies are benefiting more than developed economies because inbound travel dollars
exceed outbound travel dollars for them.



Increasing Travel Account Balance for developing countries



Declining Travel Account balance for India 1477 1250 $ million 897



1997-98



1998-99



1999-00



Source : Reserve Bank of India



India has not been able to benefit from this trend

Bombay Chamber of Commerce & Industry 27 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM India’s Travel Balance



Increase in the level of outbound travel has resulted in corresponding increase in the forex outflow, the
rate of which is much higher than the forex inflow due to inbound travel.

1991 Total forex inflow (inbound tourism) $1842 mn. 2000 $3036 mn. % change 65%



Forex outflow (outbound tourism)



$434 mn.



$2138 mn.



393%



Net forex earned by travel industry



$1408 mn.



$897 mn.



(36%)



India’s Net Foreign Exchange Earnings from Travellers K Industry experts estimate that the travel
account will become negative by 2002 if no concrete steps are taken by the government to arrest this
slide.

Source : Data Reserve Bank of India
If proper steps are not taken, the travel account balance may soon become negative, thereby becoming
a drain of source of precious foreign exchange.

Bombay Chamber of Commerce & Industry 28 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM World Tourism



There is a slight shift from Europe & America ( developed countries) as a prime travel destination
towards developing countries, but …..

America 100% Tourist arrival (% of total) 80% 60%

61.84 40.4 60.03 60.29 59.31



Europe



EAP

0.74 2.18 14.39



Middle East

3.75 0.78 2.31 14.28



South Asia

3.92 0.82 2.4 13.73



Africa

4.05 0.85 2.58 14.62



3.27 0.69 1.96 11.94



3.56
No. of Tourists (‘000) ‘90 14959 Africa ‘95 20155 4200 12353 81355 ‘97 23205 4834 14258 88254 ‘98
24937 5219 15281 87428 ‘99 26878 5655 17157 97158



South Asia 3158 Middle East 8959 EAP 54598 America

ϖ



40% 20%

20.3 19.27 18.85 18.84 18.5



Europe 282744 228382 371104 383777 394115

92799 108939 116558 119939 122874



East Asia Pacific has almost doubled the number of tourists and taken 75% of the loss suffered by
Europe & USA

Source Data : World Tourism Organisation



0% 1990

ϖ



1995



1997



1998



1999
Europe & USA have dropped from 82% to 78%



… East Asia Pacific region is the biggest gainer of this trend, largely because South Asia (India in
particular ) has not been proactive.

Bombay Chamber of Commerce & Industry 29 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM World Tourism



The total world tourist arrivals is 664 million and the dominant destinations are Europe and America.
South Asia gets a very small share.

International Tourist Arrivals 1999

400 350 Million 300 250 200 150 100 50 0

Europe Americas EAP Africa Middle East South Asia



International Tourist Arrivals Share of World Trade (%) -1999

Americas 18.5%



Europe 59.3%



EAP 14.6% Africa 4.0% South Asia Middle East 2.7% 0.9%



Source : Data WTTC



• International tourist arrivals cover the number of arrivals of visitors and not the number of persons



Why does this happen to South Asia and India in particular ? There are 2 major reasons

Bombay Chamber of Commerce & Industry 30 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM India : Long Haul Destination



Firstly, India is a long haul destination for the key countries and long haul tourism has only 18% share of
the world tourism pie

Distance in km from India Share of long haul travellers in total international traveller numbers

Long haul 18%



USA Japan Germany UK 0 5000 6,758 6,306 7,193 10000



12,565



15000



Short haul 82%



Source : Data: World Trade Organisation / World Tourism Organisation/ WWW



Does this mean that India cannot become a tourism major ?

Bombay Chamber of Commerce & Industry 31 An Integrated Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM Tourist Arrivals vs. International Trade



Secondly, international arrivals depend upon the level of international trade. Ability to fully exploit the
tourism potential will depend upon India’s ability to develop customer segment focussed strategies

International trade ($ bn) (1999) 2500 2000 1500 1000 500 0

Japan Germany UK USA



Norway South Africa Brazil Turkey Indonesia Thailand India 0



4.481 6.253 5.107



International trade ($ bn) (1999) 117 64 116 93 94 8.651 128 114



6.893 4.7



Hong Kong Korea Singapore Thailand India



China



2.48 2 4 6 8 10 Tourist arrivals (1999) (mn nos.)



0 20 40 60 Inbound international traveller (mn nos.) (1999)



Source : Business Consulting Group Analysis data from World Trade Organisation/ World Tourism
Organisation
ϖ *India needs to step up the pace of reforms to encourage global trade and international investment in
India ϖ Smaller countries with high international trade have much high tourist traffic Bombay Chamber
of Commerce & Industry 32



ϖ Countries with similar international trade level have implemented focussed integrated tourism
strategies to exploit the potential offered by international trade ϖ India has not done that An Integrated
Approach for Promotion of Indian Tourism
WHY INDIA NEEDS TOURISM Tourist Arrivals vs. Country Size

Ë The level of international trade and not size of the country is important. That is why smaller developed
get more tourist arrivals than larger developing countries like India, Brazil, South Africa, etc. 80

70

France



Source : Data : World Tourism Organisation / WWW Analysis : Business Consulting Group



Tourist Arrivals (in mns.)



60

Spain



The number of travellers coming to India is far lower than for many other countries much smaller in size
than that of India. Therefore it is argued that India remains significantly under exploited as far as its
carrying capacity is concerned.



50



Developed countries



USA



40



30

UK
China



20

Germany



Developing Countries

Australia India Brazil



Ë Australia, China & South Africa have recognised this & have become very aggressive in tourism. Others
like HK, Thailand, Malaysia have initiated special efforts to woo tourists Ë Dubai has gone further and
has a single organisation called ‘Dubai Tourism & Commerce Marketing’



HongKong 10 Thailand Malaysia South Africa Singapore Japan Indonesia Dubai 0 Bahamas 0 2000000



4000000



6000000



8000000



10000000



12000000



Total country area (sq.kms)
India’s tourism strategy should recognise the importance of co-promoting leisure and business tourism

Bombay Chamber of Commerce & Industry 33 An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY

GROWTH ANALYSIS

Inbound Arrivals Indian Tourism (Value Growth) World Tourism - Tourist Density vs Average Daily Spend
Tourism Statistics Need for Strategy Changing Pattern of Consumer Spend Domestic Tourism Indian
Outbound Tourism Satellite Accounting Factors Affecting Tourists - Leisure & Business 26 27 28 29 30 31
32 33 34 35



Bombay Chamber of Commerce & Industry



34



An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Inbound Arrivals - India



The total tourist arrivals in India was 2.66 mn according to published statistics, growing at 4% CAGR over
the past decade but stagnated somewhat over the last 4 years

3000 Tourist Arrivals (000. nos) 2500 2000 1500 1000 500 0

-9 2 -9 3 -9 5 -9 6 -9 7 -9 8 -9 9 -9 4 -2 0 91 92 93 94 95 96 97 98 00 -0 1 00

ϖ



CAGR 4.11%

ϖ



Tourist arrivals actually refer to all visitors to India. This number is way below the targeted number of
arrivals of 5 mn. tourists by 2000-2001.



19



19



19



19



19



19
19



19



19



99



20



Source : CMIE



Bombay Chamber of Commerce & Industry



35



An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian tourism (Value Growth)



Though India’s earnings from inbound travel have shown a growth in rupee terms, they have stagnated
in absolute dollar terms during the past 4 years

14000 12000 10000 8000 6000 1.50 4000 2000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 0.75



Rs. Crore

3.75



$ billion Tourist earnings ($ bn)

3.00



Tourist earnings (Rs. Crores)



θ This stagnation is partly due to business travel not growing … political and business environment has
not been condusive and , there have been events like riots, earthquakes, insurgency in parts of India
which tarnishes the image of India from the leisure tourists perspective



2.25



0.00



Source : CMIE /GOI Department of Tourism



Bombay Chamber of Commerce & Industry



36
An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS World tourism : Tourist Density vs. Average Daily
Spend



In addition to increasing inbound tourist traffic, there is also a need to increase the average tourist
spending

120

Average spend per tourist per day ($) High ( ≥ $ 100 )



Singapore

Thailand USA UK



C



Country



Tourist density (no Average spend of tourists per sq per tourist per km of total country day ($) area)



100 80



India China Thailand USA UK South Africa (1998) Brazil Malaysia Singapore Australia Dubai



41.89 N. A 101.65 98.42 81.23 26.68 57.93 N. A 288.13 64.91 N. A



0.75 2.82 5.04 5.04 105.14 4.83 0.60 24.05 9664.86 0.58 24.02



Medium ($ 50 to $ 100 )
Australia Brazil



B



60

India



40 20

Low (< $50)



A



South Africa (1998)



0



Low (<1) Medium (1-5) High (> 5) Tourist density (no of tourists per square km of total country area)



Source : Data : World Tourism Organisation/ country tourism body site



India gradually needs to move from A to B diagonally on the graph to tourism revenues

Bombay Chamber of Commerce & Industry 37 An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Tourism Statistics



Industry experts opine that India’s tourism strategy is based on unreliable and misleading

Inbound

ϖ



Outbound

ϖ



Of the 2.65 million arrivals the tourists are about 1.2 million (45% of which are leisure tourist,
numbering around 0.7 million) One estimate is that the 2.65 million includes the following categories
Million MLeisure tourists 7 Non-tourist arrivals from Pakistan, Bangladesh & Nepal P NRI returning to
meet family i Airline staff Business visitors on tourist visas, backpackers, etc. 0.7 0.5 0.7 0.25 0.5 2.65

38



Of the 3.9 million tourist departures, genuine tourists are probably 0.4 million only. Of this group tours
are probably as low as 50,000 Nearly 2 million are travelling out for their jobs in the Gulf, etc.
Government & business travellers classified as tourists, Haj pilgrims, etc. probably account for 1.6
million Actual forex outgo under BTQ in 2000 was $ 379 m (RBI). If tourist departures were indeed 3.9
million, the average tourist spend would have been less than $ 100 per head per trip ! RBI statistics of $
2139 million forex outgo on outbound travel (often quoted by tourism related publications as outbound
tourism dollars) actually shows a breakdown by category of travel. Business accounts for 60%

An Integrated Approach for Promotion of Indian Tourism



ϖ



ϖϖ



ϖ
ϖ



Source : Data : Field Interviews, RBI Publications,



Bombay Chamber of Commerce & Industry
INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS India : Need for Strategy



Domestic tourism is essential to balance seasonality of inbound tourism

ϖ



Being a long haul destination, the flow of inbound tourists is seasonal for India. Only domestic tourism
can balance that to make investment in infrastructure viable Fortunately India’s domestic tourism is
rising for reasons explained in the next two slides



ϖ



Bombay Chamber of Commerce & Industry



39



An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS India : Changing Pattern of Consumer Spend



In India, growing disposable income over the years has led to an increase in consumption expenditure
on recreation, education and cultural services, transport & communication increasing from 24% to 28%*
of consumption expenditure

6.32 3.05 11.26 80% 3.38 3.05 12.27 60% 6.06



Private final consumption expenditure (% of total)



6.51 3.15 11.60 3.86 3.00 11.84 6.20



6.75 3.23 11.69 3.98 3.20 11.15 6.48



6.51 3.07 12.18 3.85 3.02 10.34 5.86



6.82 3.40 13.30 4.26 3.04 10.34 6.05



6.69 3.53 13.66 4.39 2.97 10.18 5.23



increasing



100%



Item Misc. Goods & services Recreation, education & cultural services Transport & Communication
Medical & Healthcare



Increase / decrease (1998-99 to 93-94) + 0.37 +0.48 +2.4 +1.01 -0.08 -2.09 -0.83 -1.26
θ



40% 54.61 20% 53.84 53.52 55.17 52.79 53.35



declining



Furniture, fuel and power Gross rent, fuel & power Clothing and footwear



Although these activities, conventionally considered the preserve of the classes, can now be afforded by
the masses, the government’s policy initiatives have not changed. * In the case of middle and upper
income groups this presents a much higher share



θ



0% 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99



Food, beverages & tobacco



Source: Data : CMIE



There are huge implications of this shift in consumption for the tourism industry

Bombay Chamber of Commerce & Industry 40 An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian Domestic Tourism



The growth in disposable income has resulted in the total domestic tourist movement in India to more
than double over a period of 7 years.

θ Drivers of domestic tourism

ϖ



Tourist (mn. nos)



Growing size of the Indian middle class with increasing levels of disposable incomes. Increasing chunk of
the salaried class eligible for LTC (a tax free component) Stressful professional life and frequent need for
breaks Pilgrimage Migration for employment



180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 1993 90.00



CAGR 11.83% 139.13 141.78



159.88



168.20



176.08



*



127.12
ϖ



ϖ



ϖϖ



1994



1995



1996



1997



1998



1999



(* Figures are unreliable, but the trend is not questionable)

Source : Data : GOI - Department of Tourism



Bombay Chamber of Commerce & Industry



41
An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Outbound Tourism



Growth in disposable incomes is also one of the major factors responsible for increase in the number of
outbound tourists from India.

ϖϖ



ϖϖ



ϖ



ϖ



ϖ



The number of outbound tourists from India will go up further, especially due to lack of availability of
well developed and reasonably priced tourist destinations within the country.

Bombay Chamber of Commerce & Industry 42 An Integrated Approach for Promotion of Indian Tourism



Growing size of the Indian middle class with increasing levels of disposable incomes. Lack of good,
developed domestic tourist destinations as well as high cost of quality domestic travel Indian psyche &
the social prestige associated with foreign travel Influence of the increasing number of movies shot
overseas as also other channels in the media Aggressive promotions by foreign tourist offices in India
through road shows and regular focussed trade promotions With outbound charter being allowed by the
government, overseas travel will become affordable to many more Indians. Several good international
destinations are cheaper than domestic holidays



CAGR 6.03% Outbound Tourist* (mn. nos)



5.00 4.00 3.00 2.00 1.00 0.00
93 94 95



2.73 2.73



3.06



3.81 3.88 3.46 3.73



96



97



98



19



19



19



19



19



19
(* These figures are unreliable as explained in Slide 18 but the real outbound tourist numbers have
grown from a low base in 1993 to about 4,00,000 in 2000)

Source : Data : GOI - Department of Tourism



19



99
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Satellite Accounting



Not only is tourism per se important for an economy but the trickle down benefits of the travel &
tourism industry on the economy go beyond what is apparent . As a whole, they are too vast to be
ignored

Multiplier effect of tourism: K Transport Accommodation Catering Entertainment Recreation and other
travel related service The secondary & tertiary effects of tourism in the form of increased purchases of
Indian goods, benefits to the transport industry etc, which in turn drives the demand in the
manufacturing sector & creates employment. Increased employment further drives demand due to
higher disposable incomes.



Travel & Tourism industry



T&T Economy



Food/ beverage supply, Laundry Services, Oil/ Gas supply, Wholesalers, Printing/ Publishing, Utilities,
Financial Services, Sanitation Services, Furnishings & Equipment Suppliers, Security Services, Rental car,
manufacturing, Transportation Administration, Tourism Promotion, Ship Building, Aircraft
Manufacturing, Resort Development, Glass Products, Iron & Steel, Computers, Utilities, Concrete,
Mining, Plastics, Chemicals, Textiles, Metal Products, Wood

Source: WTTC



The satellite accounting figures suggest that the $ 11.33 bn. T&T industry in India (2000) supported a $
23.8 bn. T&T economy

Bombay Chamber of Commerce & Industry 43 An Integrated Approach for Promotion of Indian Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism - Leisure Tourists



India’s low leisure tourist numbers (inbound as well as domestic) could be attributed to 4 major reasons

Inadequate Promotion & Marketing

ϖ Poor image ϖ Inadequate targetting (country & type of tourist) ϖ Concept (diffused & no continuity)
ϖ Poor co-ordination between various marketeers and Government ϖ Inadequate information on
several tourist destinations ϖ Potential marketing channels not exploited ϖ Major fun magnets for
tourists (e.g. Disney etc. in USA, France, Japan, etc. which draw tourists by the thousands) have not been
created in India



Poor infrastructure

ϖ Inadequate in quantity due to ϖ low investment by Government and private sector, ϖ cumbersome
procedures for creating infrastructure, etc. ϖ ϖ Inadequate quality due to lack of focus on customer and
poor co-ordination ϖ Poor VFM due to high taxation ϖ and high price caused by low competition ϖ
Poor functioning of Railways, ϖ Government owned airlines, etc. ϖ Lack of well co-ordinated top quality
tour packages (intra & ϖ intercity) with door-to-door service



Restrictive Policies

Cumbersome visa procedures Interstate movement of tourist vehicles Bureaucratic processes for getting
clearances to set up infrastructure Hurdles for foreign ownership of tourism infrastructure Hurdles in
private sector management of heritage sites (Taj Mahal is an exception) Prohibition laws in certain
states



Other Obstacles

ϖ Perceived low safety, cleanliness, reliability ϖ Obstacles for tourists (visas, bookings, language, etc) ϖ
Inadequate entertainment and shopping opportunities ϖ Poor upkeep of tourist attractions ϖ
Discriminatory pricing of historical sites for foreigners ϖ Exploitative attitude of some service providers
ϖ Poorly trained guides, lack of signages/ information disseminating mechanism ϖ Sudden changes in
tariff and taxes affecting even pre sold tours
Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism
industry Bombay Chamber of Commerce & Industry 44 An Integrated Approach for Promotion of Indian
Tourism
INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism : Business Tourists



India’s low business tourists numbers (in bound and domestic) could be attributed to

Inadequate magnets to attract business groups

ϖ Very few Trade Fairs to attract business tourists (except a few at Pragati Maidan) unlike, say for
example, Germany which holds 2/3rd of all major international trade fairs & attracts 1.8 mn tourists
from outside Germany alone. ϖ Lack of nightlife & entertainment ϖ Since India remains largely isolated
from global trade (nonconvertible currency, low foreign trade, severe restrictions even for transit of
goods, etc.) international business tourists do not need to visit India



Inadequate facilities for business conventions

ϖ India is not equipped to handle very large international business conventions unlike destinations in
USA, Europe & East Asia Pacific ϖ Even for smaller conventions, facilities exist only at a few 5 Star hotels
in a few locations ϖ Other competing countries in Asia are able to offer better value packages



Attitude towards potential business investors

ϖ Barring a few notable exceptions, the business traveller to most parts of India faces a disinterested
bureaucracy, inadequate information, an attitude that smacks of being given permits as a favour and not
as a welcome guest



The 4 reasons listed for leisure tourists

ϖ Same as for leisure tourists



Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism
industry 45 An Integrated Approach for Promotion of Indian Tourism



Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY

Strategic & Operational Initiatives Influence & Facilitate Tourist Decisions Branding & Marketing Strategy
Facilitate Tourist Arrival, Stay & Movement Tourism Infrastructure Pricing & Taxation 37 38 43 49 56 59



Bombay Chamber of Commerce & Industry



46



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY: STRATEGIC AND OPERATIONAL INITIATIVES Tourism as a Priority Industry



Strategic & Operational Initiatives

Operational initiatives

ϖ



Strategic initiatives

ϖϖϖ



Operational measures aimed at improving the operational efficiency by focussing on infrastructural
constraints & how best can the existing infrastructure be better utilised with the available resources
Tours to be packaged for relevant customers as one complete experience Brand Indian Tourism through
development of ‘National Tourism Logo’



Government should declare Tourism as a Priority Industry as Software industry Put Tourism on the
Concurrent list of the Constitution of India Government should increase outlay on Tourism: India spends
only 0.9% of GDP on Tourism as compared to 49% in most other countries Lay down a master plan to
implement planned & phased development / upgradation of infrastructure & areas of tourism potential
with private sector participation Policy initiatives for the same aimed at improving the operational
efficiency by focussing on infrastructural constraints and optimising existing infrastructure with the
available resources

47 An Integrated Approach for Promotion of Indian Tourism



ϖϖ



ϖ



ϖ
Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs



India should focus marketing efforts on just six countries

Country target

ϖ



International tourism expenditure % (1998)

USA 12.7% Germany 10.6% Others 50.0% Japan 6.5% UK 7.3% France Canada Italy 4.0% 2.4% 4.0%
Netherlands 2.5%



There is a clear need for focus on a limited number of countries because India’s financial resources for
marketing are limited. India should focus on just six countries (USA, UK, Germany, Japan, France and
Italy) which account for 53% of the outbound tourists and 45% of the world tourism expenditure. That
will be all long haul tourists. To counter balance their traffic seasonality India needs to look for load from
some special segments of those countries and other source countries. In the target countries, India
needs to have a ‘push-pull’ strategy which will pull potential tourists to travel agents and tour operators
and incentivise the travel trade to push for India since they play a big role in helping a tourist to decide
on the destination, itinerary, planning, etc.



45%



ϖ



International tourism supply % (1998)

USA 14.8% Others 41.6% Germany 12.4% Japan 7.6% UK 8.5% France 4.7%



Push-Pull Strategy

ϖ
Canada 2.8% Netherlands 2.9% Italy 4.7%



53%



Source Data : World Tourism Organisation



Bombay Chamber of Commerce & Industry



48



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs



We need a clear and distinct strategy for each country

ϖ



In those few countries there is a clear need to have detailed market research data which identifies the
consumer segments for which a long haul travel will be relevant, understand the socio-economic profile,
demographic profile and tourism interests and habits of each segment. Without that marketing efforts
could go awry. For instance: USA

East Asia 29%



ϖ



American outbound tourists American outbound tourists

Govt./Military 2% Craftsmen/ factory 3% Clerical/ sales 4% Homemaker 5% Others 2% Manager/
Executive 31%



Religion/ pilgrimage 2% Study/ teaching 2% Convention conference 2%



Asia 2% Middle East 5% Africa 2%



VFR 39%



Central America 3% South America 8%



Europe 51%
Student 6%



Professional/ technical 38% Retired 9%



Business 28% Leisure/ recreation/ holiday 27% Purpose



Destination Country

Source : Data : Travel Industry Association of America



Occupation



ϖ



These statistics suggest that 36% visit East Asia Pacific, South Asia and the Middle East but only 2% head
for South Asia. Would it be possible to club India with a trip to East Asia (29%) through suitable
incentives and marketing? Many of them travel in Aug / September when it rains heavily in many parts
in India. Which destinations should India market in August / Sept? Others travel around Christmas, New
Year.

49 An Integrated Approach for Promotion of Indian Tourism



Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs



Each of India’s target countries will have its own characteristics and each relevant segment within it will
have its own idiosyncrasies. Example : Japan

Japanese outbound tourists Japanese outbound tourists

Other New Zealand 23% 1% Australia 5% Europe 13% Hong Kong 5% 50-59 years 16% Korea 10% China
6% Taiwan 5% USA 32% over 60 years 12% 0-4 years 3% 10-19 years 5% 40-49 years 17% Individually
Arranged 29% Group Travel 11% Others 7% 20-29 years 28% Package Tours 53%



30-39 years 19%



Destination Country Source Data : www.tradeport.org

ϖ



Age Profile of Outbound tourist



Type of Travel



Most Japanese travel around end Dec - early Jan, the Summer OBON (around August 15) and the Golden
week (April - May). They take short vacations and head largely to Korea, Taiwan, Hong Kong, China and
USA (where Hawai is the key destination). The rest of America and Europe have a good mix of leisure,
student and business travel. India neither fits in as a leisure spot nor a business magnet. The Japanese
traveller is not as religious as he is made out to be. If India has a Buddhist trail to offer, the target is
probably the ‘over 60 year old’ Japanese who account for 12% of the Japanese outbound tourist. What
are this segment’s specific needs for mode of travel, type of experience, food requirements, cleanliness
requirements, tour guide and other facilities? Unless this is known, marketing India to Japan may be a
waste of money 50 An Integrated Approach for Promotion of Indian Tourism



Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs



A clear strategy is required for the other target countries as well

ϖ



The Germans, French and Italians are known to be travel-friendly and may seek warm destinations in
July-August. Neighbouring countries like Maldives and Sri Lanka have exploited their beaches to lure
tourists from these destinations with well co-ordinated strategies. India for some reason, has restricted
tourist arrivals in the Lakshadweep which is next door. Barring Goa, the much talked about beautiful
coast line brings in more drift wood than tourists. The beaches of Thailand, Malaysia and Indonesia take
in tourists by the millions, whereas the Andamans and Nicobar remain largely ignored …. and probably
intentionally, due to the Governments perceived security threat. We need to realistically assess whether
islands around India are particularly vulnerable, whereas it is not so for the rest of the world.



India should focus on relevant consumer segments in a few focussed countries and offer all the
attractions that are relevant to them based on serious market research

Bombay Chamber of Commerce & Industry 51 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target NRIs



Persons of Indian Origin should be targeted

• It is estimated that there are over 20 million NRI’s the world over . Only 3.5% travelled to India last
year, even if it is wrongly assumed that there are no multiple trips. The 1987 statistics reveal that of the
12.5 million Indians living abroad, two thirds were in other Asian Countries who would tour India
without much prodding if there are interesting and economical tourist packages. It is significant that
there may be more than 3 million Indians living in the 6 target countries for world tourism. They are
known to travel like others living in the country of residence, to various parts of the world. There is a
case for motivating them to visit their roots through a targetted marketing strategy because anecdotal
evidence suggests that the second and third generation NRIs have little desire to travel to India due to
loss of roots. If they travel to India and have a good experience, they are likely to become better brand
ambassadors for Indian tourism in their country of residence than many others. Location of Persons of
Location of Persons of Indian Origin Indian Origin

Middle East 8.5% Africa 13.4% Oceania & Indonesia 3.7% America 13.1% Europe 7.7%

Source Data : Statistical Outline of India 1992-93



•



Asia 53.5%



•



The opportunity exists.

Bombay Chamber of Commerce & Industry 52 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Product Packaging



Tours should be packaged for the relevant customers as one complete experience.



• India no doubt, has several good hotels, at least one good domestic airline, one good rail experience
for tourists, many good beaches, several outstanding historical monuments, entertainment spots,
several brilliant people in the travel & tourism industry with good ideas, a well intentioned tourism
ministry. But put these in the chain from travel booking to visit to return to home country & what you
get is a mixed experience, with service gaps, joy killers and some delightful movements. Even to connect
these islands of excellence requires someone to co-ordinate all the linkages. This need not be the case if
a tour is understood to be a complete experience and is served as a one single continuum. The Kerala
package offered by a five star hotel group and a private airline is an outstanding example of what can be
done to create a great tourism experience for domestic or international tourists.



Bombay Chamber of Commerce & Industry



53



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Branding



Indian tourism needs Branding that will reflect the experience that the tourist can expect

ϖ



Tourism needs branding no less than any consumer product. There has to be a promise that appeals to
the relevant population. There has to be a theme/ logo that is relevant and one that can be actually
experienced during the visit. Several countries have adopted certain themes and positioned tourism in
their countries in a manner that attracts the target segments. See the box alongside. ‘Experience India’ a
joint initiative of the private sector and the Government appears to be a step in the right direction. A
theme for marketing India could emerge from it. The ‘Maharaja’ logo could represent the tourists’
experience in India. Various organisations in the tourism business should be allowed to use the Indian
Tourism Logo provided they adhere to certain norms and policies that are laid down.



Thailand - “Land of Smiles” Malaysia - “Malaysia truly Asia” Mauritius - “1% water, 99% fun” Maldives -
“The sunny side of life” Dubai - “Discover Dubai” Srilanka - “A land like no other” Seychelles - “Seychelles
magic”



ϖ



ϖ



Bombay Chamber of Commerce & Industry



54



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach



Multi-channel approach to promotion of the concept of Indian tourism using a unified theme for
promotion

Channel Dollar Debit Cards Approach to promotion/ information dissemination Debit cards can be
issued to Foreign tourists on payment in foreign exchange by approved agencies e.g. Forex Dealers,
select tour operators, etc. ‘Debit Cards’, to be acceptable for all tourism related purposes - air, train,
hotel and restaurants, monument entry, shopping etc. Companies who participate, will have to provide
the necessary infrastructure to handle debit cards, give token discounts/ facilities and portray the
‘Tourism Logo’ at their company premises. A booklet giving names of all participant agencies will have to
be provided to the tourists on purchase of’ ‘Debit Cards’. The cost of this ‘Debit Card’ should be
recovered through advertisements Popularity of Indian cuisine overseas is undisputed. At peak hours
there is considerable waiting time at a majority of these restaurants. This waiting time could be utilised
to promote India as a tourist destination by screening of theme videos & disseminating information
through information kiosks. This also ensures that the promotion is addressed to the right audience.



Select Indian restaurants in target markets should be tapped



Bombay Chamber of Commerce & Industry



55



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel
Concept of co selling / co marketing with key operators Approach to promotion/ information
dissemination Underwriting the media costs of promotion. This would not only incentivise the tour
operators to promote India as a destination amongst the tourists but also help depict India much more
prominently in the media (brochures, information booklets, billboards etc.) Identifying destinations of
high tourist traffic in the same region as India and pursue tourists coming to these destinations to come
to India through attractive fares, targeted promotions. Plan joint charter flight with neighboring SAARC
countries like Nepal, Sri Lanka, Maldives on one leg of their journey and take Indian destinations like
Goa, Agra, Jaipur on the other. Offer attractive fares for tourists visiting South East Asian countries
(could be to visit Andaman & Nicobar islands) Plan joint promotional initiatives with Indian and other
willing carriers & promote India as a tourist destination. Outsourcing promotion and marketing activities
in the target countries to private players with periodic targets to be fulfilled by the agency. This would
also help provide much needed accountability towards fulfillment of targets. It is not practical to expect
the Government of India’s Tourism Department alone to get the required reach

56 An Integrated Approach for Promotion of Indian Tourism



ϖ



Airline Schemes



ϖ



ϖϖ



Outsourcing promotion and marketing activities in the target countries



ϖ



Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel
Approach to promotion/ information dissemination



World Wide Web site for information and action



ϖ



An interactive website that carries the India brand, conveys the proposed theme, and helps tourists with
all kinds of information which will help a tourist from all the relevant segments in the target countries to
know all that is relevant to select India as a destination, decide on the itinerary, city specific details to
decide on the specific activities, the hotels to stay in, the transport to book, the shopping that can be
done, the entertainment available, etc. Interactive facilities to query and get information or action such
as reservation, etc. There are websites in India which partially meet these requirements or deal with just
one state. A comprehensive effort is called for, with hyperlinks to the service provider sites. It should be
available in the languages of the target countries. Such an initiative could be made to pay for itself by
subscriptions fees from industry participants. PIO’s/ NRI’s can serve as goodwill ambassadors for the
country. With the increasingly large number of Indians overseas and their knowledge about the country,
they can be a good source of promotion. The expatriate community is very strong overseas. They have a
lot of community activities and celebrations during various Indian festivals. These can be used to
promote India as a tourist destination amongst the people interested to know more about India and its
culture.

57 An Integrated Approach for Promotion of Indian Tourism



PIO’s/ NRI’s in overseas countries



ϖ



Bombay Chamber of Commerce & Industry
AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel
Approach to promotion/ information dissemination



Expatriates in India (includes foreign consulates in India) Indian consulates abroad Business Travelers
visiting India Media/ sports celebrities Incentivising tour operators Mass media (TV, radio, movies etc)



ϖ



Expatriates could be a very good source of promoting India as a tourist destination to a large overseas
destination. For this, the domestic tourist destinations should be promoted aggressively within the
expatriate community. Indian consulates abroad could be used as a medium of information
dissemination / promotion Business travelers, if provided with a good experience, could serve as an
excellent word of mouth publicity for India. India has always attracted celebrities from the west who are
in search of spiritual solace. These people could be not only targeted for promotion but also they could
be used as a channel to promote India as a tourist destination. Tour operators could be incentivised
lucratively for selling packaged tours to India Establishing contacts with TV program producers, travel
writers, adventure societies, religious groups, film producers (to encourage them shoot in India)



ϖ



ϖ



ϖ



ϖ



ϖ



Bombay Chamber of Commerce & Industry
58



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance



Having identified target countries remove obstacles

Situation

ϖ



Suggestions

ϖ



Indian missions are located in a few cities in the overseas countries. Tourists willing to tour India need to
get a visa for which either they have to personally travel to the city where Indian mission is located or
send their passport to the Indian mission through post or some other form of delivery. For example a
tourist in Manchester has to either send his passport to Edinburgh or personally go there in order to
obtain a visa. Individuals are not very comfortable parting with their passports.



Visa on arrival for certain categories of tourists/ countries at least for a limited duration of stay.
Facilitate entry of foreign tourists, visiting India in large groups, by allowing inbound travel operators to
bring these tourists into India without any visa requirements on the guarantee of the tour operator. This
facility can be extended only to reputed tour operators with an established track record.



ϖ



ϖ



Bombay Chamber of Commerce & Industry



59
An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance



Visitors/ tourists of all nationalities (except Nepal) require visas for visiting India

Nationality American Australians British Canadian European/ Other Indian Bangladesh Nepal Singapore
Sri Lankan Japanese Nepal Y Y Y Y Y No Y NA Y Y Y India Y Y Y Y Y NA Y No Y Y Y Sri Lanka Maldives #
Bangladesh @ No No No No No No No No Y No No No No No No Yes No No No NA No No No No No No
No Y NA No No Y Y Singapore No No No No No Y No No NA No No Japan No Y No No No Y Y Y No Y NA
Canada No No No NA No Y Y Y No Y No Greece No No No NA NA Y Y Y No Y No UK No No NA No No Y Y Y
Y Y No Australia * Y NA Y Y Y Y Y Y Y Y Y USA NA Y No No No Y Y Y Y Y No



* Australia is ETA - Electronic Travel Authority # Visa on arrival on presentation of health papers @ For
items marked ‘No’ visas are issued on arrival at Colombo Airport



Source : WWW



Visa on Arrival is available in countries like Bhutan, Sri Lanka, Nepal, Singapore, Seychelles, Maldives,
Macau, Thailand, Turkey, Taiwan, etc. who are competing with India for tourists

Bombay Chamber of Commerce & Industry 60 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance



By categorising countries, India could do away/ facilitate visa requirements without compromising
security concerns



Country Category



Visa Criteria



Identified markets for promoting India as a tourist Category 1 destination in terms of tourists interest,
disposable No visa requirements income, historical data e.g. USA, select European countries, Japan, etc.
Category 2 Tourists from countries seen as a potential hazard from the point of health or some other
factors e.g. African countries, Middle East, etc. Category 3 Tourist from countries seen as a potential risk
in terms of illegal migrants, national security, e.g. Afghanistan, Pakistan, Bangladesh etc. Visa on arrival
based on laid down criteria (presentation of required documents, certificates, etc.) Stringent visa
requirements in the interest of issues like national security, illegal migration, etc.



Bombay Chamber of Commerce & Industry



61



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Remove Obsolete Laws
Without Compromising Security



Obsolete laws & restrictions obstruct tourism.

Indian visitors have to procure permits to go to some parts of the North Eastern region due to the
enforcement of ‘Inner line permits (ILP’s)’ in some hilly states. Restricted area permits for foreign
tourists to be procured in addition to visa requirements. Restrictions like prohibition of photography on
dams & installations like All India Radio (AIR) stations could be done away with after proper assessment
of security & related issues. The recent rule requiring Indian citizens to report their foreign visitors to
the nearest police station if they stay more than a certain number of hours is another case of unrealistic
policy.



Bombay Chamber of Commerce & Industry



62



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Infrastructure - Soft
Issues



Need to address negative impressions about India



ϖϖϖ



Security Language Quality of tour guide Safety standards Quality of lodging & boarding Cleanliness &
hygiene conditions



ϖ



It is very important for India to deal with problems and also address misinformation in their promotions
too. Lack of information could result in the tourist decision being influenced by adverse media reports
which may talk about some trouble/ calamity in some state of India which may not even be of concern
to the tourist since he may be visiting some other state albeit within India. The fact that India’s cultural
& geographical diversity is so vast that some trouble happening in Kashmir or some natural calamity in
Orissa does not in any way affect the tourist planning to visit Rajasthan. The international image of India
is that of a country that epitomies poverty, poor hygiene & low safety standards. There is always a fear
within the tourists that they would contract some disease when they visit India. This needs to be
countered. Stray experience of being taken for a ride gets blown out of proportion. This needs to be
curbed but that alone does not keep tourists away from India. How does Italy with a similar reputation,
get tourists?



ϖ



ϖ



ϖ
ϖ



ϖ



ϖ



ϖ



Bombay Chamber of Commerce & Industry



63



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Maintenance of
Heritage Sites



Like Italy and Greece, India too, can attract tourists to our monuments / heritage sites

Ground realities/ facts/ Issues :

ϖ



The need

ϖ



India has 3700 protected monuments and 10000 unprotected monuments. Archaeological Survey of
India. Does conservation, illumination, penetration, creating public facilities, and publications/
promotions. ASI’s annual budget is Rs. 156 crores i.e. Rs. 7600/- per monument per year (after providing
for salaries and expenses of the ASI). This amount is not at all sufficient to fulfil even the basic
preservation and maintenance of monuments and sites.



ϖ



Restoration and maintenance of world heritage structures and the surroundings like approach roads,
non ticket areas etc. Ensure that people other than tourists (beggars, urchins, encroachers etc) do not
get inside the monument premises. Provide a safe and secure environment to enable the tourists to
have a memorable experience inside the monument. No amount of increase in gate collections will solve
the problem 38 sites have been identified. Get the private sector to participate in funding (and
managing the property if possible)



ϖ



ϖ
ϖ



Source : Data : India Today 9th July, 2001 Bombay Chamber of Commerce & Industry 64 An Integrated
Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Preserving Heritage
Sites



Preserving the participation.



heritage



of



India



closer



government



private



sector



Action Plan : List of 38 sites prepared, which are in need of fiscal support. Sites include the likes of
Ajanta/ Ellora, Fatehpur Sikri, Hampi, Red Fort, Alchi monastery Ladakh. Start action with private sector
help quickly



Govt. benefits from increased tourist turnout : - Benefit to the local economy and the country as a
whole. An ideal way to solve out regional economic balance - Prevent heritage property from falling to
pieces - Can avail of best possible advice and services of experts in the fields of restoration and
conservation
Private sector benefits : - Guarantee mileage at the site like signages, etc. - Use of monument’s image in
their advertisements - Private players have a say in the management of their money - Corporate and
individual donations under ‘Adopt a Monument’ scheme, eligible for full income-tax exemption as also
other benefits which may be site or project specific

Source : Data : India Today 9th July, 2001



Bombay Chamber of Commerce & Industry



65



An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles



Since it is impractical to raise the quality of infrastructure across the whole country ‘Special tourism
circles’ could be developed around anchor tourist destinations and promoted under a unified theme of
India.

ϖ



Specific products, (represented by destinations) covering various interest areas to be identified
alongwith anchor destinations in a number of regions for development. The anchor destinations and the
surrounding ‘destinations’ representing the products should be classified as ‘Special Tourism Circles’.



ϖ



ϖϖ



ϖ



ϖ



ϖ



ϖ



‘Special Tourism Circles’ should satisfy the needs of a variety of needs of target tourist interest groups by
offering a mix of conventional & contemporary destinations & activities. Personalization &
individualization of itineraries wherein the tourists should be able to pick & choose, to suit individual
tastes, from a basket of offerings. Each designated area should be provided with full fledged
infrastructure facilities. Package of monetary & financial assistance/ incentives for private participants
should be conceived to provide impetus to tourism. There is no need to prevent foreign ownership or
leasing of infrastructure. The anchor tourist destination for each ‘Special tourism Area’ should be the
focus of all promotions & should serve as as gateway city for that particular ‘Special Tourism Circle’.
‘Special Tourism Circle’ should specifically address basic areas of concern of inbound tourists like safety,
security, hygiene & cleanliness etc., should be kept clear of beggars Concept of ‘Project in the Box’
wherein tourism & related projects are cleared subject to the parties agreeing to comply to a given set
of regulatory conditions.



The final objective for this is to be able to offer & deliver to the tourist, an ‘Experience’ comparable to
the best in the world & not a destination

Bombay Chamber of Commerce & Industry 66 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles



Various regions within India need to be evaluated for potential of developing them into ‘Special Tourism
Circles’.

‘Special Tourism Circles’ should be selected after evaluating the regions in terms of the ‘Infrastructure
Development Index’ & ‘Potential for Exploitation’ which should be based on the following parameters:
ϖ Carrying capacity of the region (in terms of number of tourists) ϖ Connectivity/ infrastructure (tourist
specific/ general) ϖ Extent of investment required for building/ upgrading the necessary infrastructure
to world class levels. ϖ The attractiveness of returns in terms of return on capital employed, time for
breakeven etc (tourist specific/ general infrastructure) ϖ Assessment of the region (in terms of safety,
manpower availability, tourist interests it can satisfy) ϖ Popularity amongst the domestic tourists ϖ
Identify boundaries for these areas for necessary notification ϖ Master plan for the area for the purpose
of development

ϖϖ



Develop & allot land for hotels & tourism related services at reasonable rates To constitute Special Area
Development Authority



Facilitate private sector participation through fiscal incentives & by allowing private companies to bid for
development rights in various circuits/ areas which could cover various tourism related infrastructure

Bombay Chamber of Commerce & Industry 67 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles



Based on such evaluation we would have four categories of regions for development. Some places in
each cell need to be identified

High



Infrastructure Development Index



Regions already exploited like the Golden Triangle



1



2



Goa Kerala



There needs to be different strategies for each of the three categories. Policies should facilitate relevant
action on the ground by hotels, airlines, tour operators, etc. The overall game plan is to move places in
category 3 to 2, and then to category 1 over a period of time by planned development of domestic and
inbound tourism. This paper does not seek to classify individual regions. That requires a detailed study.
The places mentioned in the cells are merely illustrative



4



3



Low priority for tourism
North East Andaman & Nicobar



Low Low Potential for further exploitation High



Goa & Kerala, for instance, could provide the platform for the government to start promoting tourism
on the international scene

Bombay Chamber of Commerce & Industry 68 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : PRICING & TAXATION Pricing



High cost of tourism in India despite indifferent infrastructure is a result of high taxation and inadequate
competition.



ϖ



Restrictive policies and the maze of permits / clearances that are the legacy of the licence Raj continue
to hamper the travel and tourism industry. This naturally reduces the infrastructure on the ground and
leads to higher pricing due to shortage. Multiplicity of taxes, high licence fees, etc. raise the cost of
hotels and travel services. It is a case of the Central and State Government killing the goose that lays
golden eggs. Much more can be earned by taking inbound travel to India from the measly 2.6 million per
year to 5 times that (China : 27 million, Turkey : 7 million, Thailand : 9 million) than by charging 30-40%
taxes which stunt the industry. One should not forget the domestic tourists (including business) who
automatically cut down on such expenses. Government should look at the elasticity of demand for
tourism and not do simplistic revenue budgeting. Discriminatory pricing of air travel, entry to historical
sites and sanctuaries weighed against foreigners is not taken to kindly. We are well within our rights to
do so, but the question is, what message does one want to convey to foreign tourists?



ϖ



ϖ



Tourism demand is price elastic

Bombay Chamber of Commerce & Industry 69 An Integrated Approach for Promotion of Indian Tourism
AN INTEGRATED STRATEGY : PRICING & TAXATION Taxation Policy



Tax Deferment through creation of a ‘Currency Fluctuation Reserve’

The Tourism Industry, one of the largest foreign exchange earners for the country. Income from Tourism
in Foreign Exchange should be ‘Deemed as Exports’. It is crucial for the country to enhance foreign
exchange reserves. As an incentive, Government should permit the Tourism and thousands of related
industries to create “Foreign Exchange Fluctuation Reserve” to the extent of Net Foreign Exchange (NFE)
earned. A fixed percentage of each years’ profit can be transferred to this reserve account, subject to a
monetary limit on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure.
The annual contribution to such reserve should be tax deductible at the time of transfer of amount to
reserve account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be
released on payment of tax. This tax deferment will provide financial support to the Foreign Exchange
earner to meet any foreign exchange risks, which may arise and improve their margins to some extent.
At the same time the Government will get its tax revenue, though after a specified period. A similar
incentive mechanism was operating earlier for investment in plant & machinery as “Development
Reserve”.



Tourism Industry could be ‘deemed as Exports’ to the extent of Net Foreign Exchange earned’ by the
Industry

Bombay Chamber of Commerce & Industry 70 An Integrated Approach for Promotion of Indian Tourism
Organisational Mechanism

For Development of Tourism

Government & Industry to Unite Strategically Possible Models Why a Professional Body ? - ‘National
Association for Tourism Promotion’ (NATPRO) ‘NATPRO’ - Aims and Objectives Action Steps for
‘NATPRO’ 64 65 61 62 63



Bombay Chamber of Commerce & Industry



71



An Integrated Approach for Promotion of Indian Tourism
ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Strategic Government & Industry
Partnership



Strategies & policies for development of Tourism in India requires an effective body for co-ordination
between government and industry

Issues

ϖ



Action areas/ decisions concerning the tourism industry are out of the jurisdiction of the Ministry of
Tourism & involves other ministries as well. (such as the Ministry of External Affairs, Ministry of Finance,
Ministry of Urban Development, Home Ministry, Ministry of Environment at the centre and various
Ministries and Departments at the State level). They often retard or work at cross purposes despite the
best intentions. Policy initiatives by the GoI through a series of National Tourism Policies as well as fiscal
incentives like tax breaks etc. have failed to bring life to this industry primarily due to lack of any action
at the ground level There is a clear need to build & sell the brand of Indian tourism worldwide but there
is no single body depicting the united face of the tourism industry in India Presently, the tourism
industry is represented by a large number of associations/ bodies. These associations / bodies are either
a part of a larger industry body or are tourism industry related trade bodies (either an industry
association or a trade body). Each association/ body works independently with its own agenda. e.g.
ASSOCHAM, FICCI, CII, IATO, TAAI, FHRAI, apart from Bombay Chamber of Commerce & Industry None of
the bodies currently monitor, maintain & update detailed reliable data related to the tourism industry



ϖϖϖ



ϖ



The need is for a mechanism whereby development and implementation of various strategies & policies
are ensured.

Bombay Chamber of Commerce & Industry 72 An Integrated Approach for Promotion of Indian Tourism
ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Possible Models



There are three models for developing a unified body to represent the tourism industry

Federation of the various trade Associations that belong to Travel and Tourism ϖ Danger of getting
labelled or positioned as yet another trade body for lobbying, a constant internal tussle for turf for
prioritisation of issues, etc.are the inherent dangers of this model ϖ A co-ordinated panel of the
Tourism cells of CII, FICCI, Assocham, etc. is not being considered because these association do not as
yet have a track record of joint working except on specific issues. ϖ What is required is a fully
operational organisation and not a panel, and it needs to be headed by people who will rise above the
sectarian interests of one trade or the other, even if they belong to one Board of Tourism Development
in India ϖ Not recommended because in India, Boards tend to be quasi Government bodies with a good
charter but little power or funds to provide action. The organisational format too is not conducive. e.g.
Coffee Board, Rubber Board, Tea Board, etc. ϖ However, the Singapore Tourism Promotion Board and
Dubai Tourism are outstanding examples of success A NASSCOM like format with industry leaders
working in close touch with the Government ϖ A fully professional private sector initiative with a
functioning organisation with clear objective and plans ϖ What NASSCOM did for the IT sector can be
done for the tourism sector ϖ The GOI understands this model and can be persuaded to support it



For convenience, the suggested body is referred to as NATPRO

Bombay Chamber of Commerce & Industry 73 An Integrated Approach for Promotion of Indian Tourism
ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Why a professional body - ‘National
Association for Tourism Promotion (NATPRO)’



Prima facie there is a case for the creation of ‘National Association for Tourism Promotion (NATPRO)’ an
apex professional body which can coordinate & promote the interest of the tourism industry with a
single voice

Why a professional umbrella body for the Tourism industry ?

ϖ



There is a need to co-ordinate the needs and activities of the various trade bodies on the one hand and
co-ordinate the actions of various ministries which act independently but impact the tourism business
The option of vesting of all possible powers / responsibilities related to the tourism industry with a
single ministry is also not a practical solution, because of the nature of issues involved. Will effectively
function as an apex body representing all the major tourism industry related trade Associations.
Therefore a full time professional body is required to deal with issues and work for Indian tourism in a
co-ordinated manner.



ϖ



ϖ



ϖ



Such a body would act as the prime catalyst for the growth of tourism & related industry.

Bombay Chamber of Commerce & Industry 74 An Integrated Approach for Promotion of Indian Tourism
ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM ‘NATPRO’ - Aims and Objectives



The Government needs to encourage the creation of such a body as it will complement the role of the
Tourism Ministry

Aims & Objectives of ‘NATPRO’ ϖ Vision and Strategy: Build a brand of Indian tourism & work towards
building & delivering what the brand promises to offer ϖ Maintain close interaction & work actively with
the GoI in formulating National Tourism Policy & other related issues ϖ Maintain & disseminate
information & statistical database of tourism & hospitality services related activities ϖ Take effective
steps to create awareness about the economic & social benefits of tourism ϖ Promote the concept of
travel as a leisure activity domestically. ϖ Encourage members to provide world class quality products &
services by laying down industry standards of service, manpower quality & infrastructure. ϖ Actively
help in the development of tourism related service infrastructure by assuming the role of certifying/
accreditation body for various tourism industry related vocation & training institutions. ϖ Provide an
ideal forum for overseas & domestic players to explore the vast potential of Indian tourism through joint
ventures, strategic & marketing alliances, joint product development by organising business meets with
delegations of various countries. ϖ Provide members with opportunities to participate at major tourism
events across the world & organise tourism events in India. Involve membership participation in various
forums on subjects like HRD, Export, Food & Nutrition, Housekeeping etc.



Act as advisory, consultative and co-ordination body for tourism industry through representatives in
various committees of the Government of India including various Ministries like Ministry of Tourism,
Ministry of Finance, Ministry of External Affairs etc. The government should be convinced on the need &
utility of such a body to partner the Tourism Ministry

Bombay Chamber of Commerce & Industry 75 An Integrated Approach for Promotion of Indian Tourism
ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Actionabl;e Agenda - ‘NATPRO’



Action steps for the setting up of a NATPRO

ϖ



A few visionaries from the travel and tourism industry who enjoy respect within their respective trade
bodies and the Government should form an Interim Council The Interim Council should make a
presentation of BCCI’s White Paper on Tourism to the PMO and if possible to a group of key
functionaries including Ministers from all the relevant ministries. The objective of which will be a) to get
the Government of India to incorporate some of the suggestions in the proposed tourism policy b) to get
the Government of India to bless the formation of NATPRO



ϖ



ϖ



With the help of an initial corpus, the Interim Council should get the charter for NATPRO drawn up,
complete all the legal and procedural formalities for creating NATPRO, develop the organisational
framework required and prepare a Business Plan Presentations to the Trade Bodies for a ‘buy-in’ and to
start the membership drive Recruitment of top flight professionals and setting up of the elected /
nominated Executive Council which will replace the Interim Council NATPRO to prioritise activities for
the first 6 months and to develop a detailed action plan



ϖϖ



ϖ



Bombay Chamber of Commerce & Industry
76



An Integrated Approach for Promotion of Indian Tourism
White paper o ntourism

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White paper o ntourism

  • 1. WHITE PAPER ON AN INTEGRATED APPROACH FOR PROMOTION AN INTEGRATED APPROACH FOR PROMOTION OF INDIAN TOURISM OF INDIAN TOURISM Prepared for THE BOMBAY CHAMBER FOR COMMERCE & INDUSTRY BUSINESS CONSULTING GROUP 309/310 Mhatre Pen Bldg, Senapati Bapat Marg, Dadar (West) Bombay 400 028 Phone : (22) 430 1745, 437 1823, 431 3914 Fax : (22) 430 1655 E-Mail : bomoff@businessconsultinggrp.com Website : www.businessconsultinggrp.com
  • 2. About Bombay Chamber The Bombay Chamber of Commerce & Industry is one of the oldest Chambers of Commerce in the Country. The Bombay Chamber for over 165 years of its existence, since its inception in 1836, has been serving Trade & Industry. It is well respected for its balanced and studied approach to matters pertaining to development of trade and industry, promotion of government – industry inter-linkages and for pursuing radical trade policies. Bombay Chambers’ membership comprises predominantly the most of large and medium size companies from manufacturing and service sectors, leading banks and financial institutions and the multinationals having their corporate headquarters in Mumbai. The Chamber’s membership, therefore, contributes almost a quarter of India’s Gross Domestic Produce in manufacturing and service industries. Bombay Chamber of Commerce & Industry 1 An Integrated Approach for Promotion of Indian Tourism
  • 3. INTRODUCTION The Bombay Chamber seeks to reflect the views, perceptions and interests of their constituents in a proactive and constructive manner. In recognition of its changing role, the Chamber initiated debate on various important issues, such as future direction of economic reforms and integrated approach for promoting of Indian Tourism. The Tourism Committee of the Bombay Chamber of Commerce and Industry therefore, engaged the services of Business Consulting Group to develop a White Paper on Indian Tourism The objective of the White Paper is to generate action in the Government and the Industry in terms of policy and operational initiatives that will help promote the growth of Indian tourism - inbound as well as domestic tourism. Several reports have lamented the low share of India in world tourism and have made meaningful suggestions. Nothing much has changed on the ground despite all that. It is expected that the Bombay Chamber’s White Paper which that offers practical direction for change will spur action for change and growth. Bombay Chamber of Commerce & Industry 2 An Integrated Approach for Promotion of Indian Tourism
  • 4. ACKNOWLEDGEMENT . Bombay Chamber would like to express its gratitude and sincere thanks to the Sponsors of this White paper: The Indian Hotels Co. Ltd. Thomas Cook (India) Ltd Kuoni Travel (India) Ltd. BCC&I Trust for Economic & Management Studies Secretariat: Bombay Chamber of Commerce & Industry Mr. L.A.D’Souza, Executive Director Ms. Kavita Sharma, Deputy Director Bombay Chamber of Commerce & Industry Oficial Travel Agents Jet Airways India Pvt. Ltd. Consultants: Business Consulting Group Mr. Raj Nair, Chairman Mr. Utpal Ashar, Consultant 3 An Integrated Approach for Promotion of Indian Tourism
  • 5. ADVISORY COMMITTEE Mr. R. K. Krishna Kumar, Managing Director, The Indian Hotels Co. Ltd. Mr. Ranjit Malkani, CMD, Kuoni Travel India Ltd. Mr. Adi Katgara, Chairman, Travel Corporation of India Mr. Ashwini Kakkar, MD, Thomas Cook India Ltd., Mr. Lalit Sheth, CMD, Shree Raj Travels, Mr. Reyaz Mama, Director, Ratan Mama Consultants Mr. Vishambher Shewakramani, Managing Director, Ras Resorts, Mr. Anil Kaul, General Manager, The Oberoi Hotels, Mr. Yogesh Dhawan, General Manager, The Regent Mumbai. Mr. Rajan Divekar, Director, A.F. Ferguson & Co., Mr. P.J. Crasta, Sr. General Manager, Jet Airways India Pvt. Ltd. Mr.Ajoy Misra, Sr. Vice President The Indian Hotels Co. Ltd. ( Chairman, Tourism Committee) Mr. Zubin Karkaria, Sr. Vice President & COO, Kuoni Travel India Ltd. ( Co-Chairman, Tourism Committee) Mr. U.K. Mukhopadhyay, Secretary,Department of Tourism, Maharashtra Mr. Ashish Kumar Singh, Managiong Director, MTDC Mr. M.M. Jain, Asst. Director, Govt. of India Tourism Office Mr. B.B. Gomre, Asst. Director Govt. of India Tourism Office, Mr. Alok Awasthi, Jt. Director, MP Tourism Development Corporation Mr. Bimlesh Kumar, Regional Manager, UP State Tourism Development Corporation Bombay Chamber of Commerce & Industry 4 An Integrated Approach for Promotion of Indian Tourism
  • 6. CONTENTS Executive Summary Action Plan - Government Action Plan - Industry Why India Needs Tourism Indian Tourism Industry - Growth Analysis An Integrated Strategy - Strategic & Operational Initiatives - Influence & Facilitate Tourist Decisions - Branding & Marketing Strategy - Facilitate Tourist Arrival, Stay & Movement - Tourism Infrastructure - Pricing & Taxation Organisational Mechanism for Development of Tourism Bombay Chamber of Commerce & Industry 5 1 11 15 18 26 37 38 43 49 56 59 61 An Integrated Approach for Promotion of Indian Tourism
  • 7. EXECUTIVE SUMMARY Why India Needs Tourism Indian Tourism Industry - Growth Analysis - Factors Affecting Tourism Industry in India An Integrated Strategy : Strategic & Operational Initiatives Influence & Facilitate Tourism Decisions Branding and Marketing Strategy Facilitate Tourist Arrival, Stay & Movement Tourism Infrastructure Pricing & Taxation 1 2 4 5 6 7 8 9 10 Operational Mechanism for Development of Tourism Bombay Chamber of Commerce & Industry 6 An Integrated Approach for Promotion of Indian Tourism
  • 8. EXECUTIVE SUMMARY Why India Needs Tourism • • Tourism is the largest sector in the worldwide exports of goods & services. At over $ 500 billion, it is larger than automotive, chemicals, fuels and every other sector. Recognise Enormous potential of the Hotel, Travel, Entertainment, Transport and other allied industries. As per WTTC, the travel and Tourism economy in India which includes all the above stated industries as well as supporting industries currently account for 17.4 million jobs in India or 5.8% of total employment. This has a potential to rise to 25 million jobs or 6.8% of total employment by 2010. Developing economies are benefiting more than developed economies because inbound travel dollars exceed outbound travel dollars for them, but in India’s case the travel account balance per year has declined from $ 1.5 billion in 1997-98 to $ 0.9 billion in 1999-2000 because the increase in forex outflow due to outbound travel is much higher than the increase in forex inflow on account of inbound travel. The total world tourist arrivals is 664 million tourists and the dominant destinations are Europe & America. South Asia gets a very small share. Only some part of it can be addressed by India because it is a long haul destination for the key countries and long haul tourism has only 18% share of the world tourism pie. International arrivals into any country depends upon the level of it’s International trade. India’s low level of international trade limits its inbound tourism potential further. But its ability to fully exploit the tourism potential will depend upon its ability to develop customer segment focussed strategies through co-ordinated approach by the government, hotel, airlines, tour operators etc. Other countries like Thailand, Brazil, Turkey, etc. demonstrated this. Tourism industry can boost India’s GDP and forex earnings significantly 7 An Integrated Approach for Promotion of Indian Tourism • • • • Bombay Chamber of Commerce & Industry
  • 9. EXECUTIVE SUMMARY Indian Tourism Industry - Growth Analysis • International tourists arrival in India was 2.66 mn according to published statistics, growing at 4% CAGR over the past decade but stagnated somewhat over the last 4 years. Though India’s earnings from inbound travel have shown a growth in rupee terms, they have stagnated in absolute dollar terms during the past 4 years. • In India, growing income over the years has led to an increase in consumption expenditure on recreation, education and cultural services, transport and communication increasing from 24% to 28%. This and the growth in disposable income has resulted in the total domestic tourist movement in India to more than double over a period of 7 years. Growth in disposable incomes is also one of the major factors responsible for increase in the number of outbound tourists from India. The number of outbound tourists will increase further, especially due to lack of availability of well developed and reasonably priced tourist destinations within the country. Tertiary benefits of tourism are huge. The trickle down benefits of the travel & tourism industry on the economy go beyond what is apparent. The Satellite Accounting figures of WTTC suggest that the $ 11.33 bn Travel &Tourism industry in India (2000) supported a $ 23.8 bn Travel & Tourism related economy. Unless the Government and Private sector come together and develop a clear strategy, India will continue to be ignored as an interesting long haul destination by leisure and business travelers and India will become, gradually one of the few developing countries with a negative travel account balance. • • Bombay Chamber of Commerce & Industry 8 An Integrated Approach for Promotion of Indian Tourism
  • 10. EXECUTIVE SUMMARY Factors Affecting Tourism Industry in India • Leisure Tourists : India’s low leisure tourist numbers (inbound as well as domestic) could be attributed to: • Inadequate Promotion & Marketing Poor Infrastructure Restrictive Policies Other Obstacles Business Tourists: India’s low business tourist numbers (inbound as well as domestic) could be attributed to: Inadequate Magnets to attract business groups and facilities for business conventions Attitude towards potential business investors Inadequate Promotion & Marketing Poor Infrastructure Restrictive Policies Bombay Chamber of Commerce & Industry 9 An Integrated Approach for Promotion of Indian Tourism
  • 11. EXECUTIVE SUMMARY An Integrated Strategy : Strategic & Operational Initiatives • Put Tourism on the Concurrent List of the Constitution of India • Government should declare Tourism as a ‘Priority Industry’ like Information Technology • Government should increase outlay on Tourism - India spends only 0.9% of GDP on Tourism compared to 4-9% in most other countries. • Lay down a master plan to implement planned and phased development/ upgradation of infrastructure and areas of tourism potential with private sector participation • Policy initiatives for the same • Aimed at improving the operational efficiency by focussing on infrastructural constraints and optimising existing infrastructure with the available resources. Bombay Chamber of Commerce & Industry 10 An Integrated Approach for Promotion of Indian Tourism
  • 12. EXECUTIVE SUMMARY An Integrated Strategy : Influence & Facilitate Tourist Decisions • • • • • Focus on select target countries, which account for most of the outbound tourists and most of the world tourism expenditure e.g. UK, USA, Germany, Japan, France, & Italy Need to have detailed market research data to identify socio-economic profile, their tourism needs, etc. For these countries deploy a country specific Push-Pull Strategy to influence their choice of holiday destination Target Non Resident Indians (NRIs) too because they are large in number and they can influence nonIndians to visit India Promotion through multiple channels. Several suggestions have been made in the report, ranging from Indian restaurants, airlines to creation of an interactive website for Indian tourism Bombay Chamber of Commerce & Industry 11 An Integrated Approach for Promotion of Indian Tourism
  • 13. EXECUTIVE SUMMARY An Integrated Strategy : Branding & Marketing Strategy • Indian Tourism needs Branding - Several countries have specific themes to attract tourists and their entire marketing strategy and offerings are in sync with the theme. e.g. Land of Smiles (Thailand), 1% water, 99% fun (Mauritius), etc. The ‘Experience India’ project is a step in the right direction. A theme could emerge out of it. Develop ‘National Tourism Logo’ that can be used by industry players in their communication and publicity materials. Introduce the concept of ‘Debit Cards’ like prepaid Phone cards to facilitate tourist spending. ‘Interactive website’ which could be made to pay for itself through fees from industry participants Quality information dissemination through contemporary & innovative means using multiple channels e.g. Select Indian restaurants in target markets, airlines and other channels. Co- marketing/ Co-Selling with key travel operators Outsourcing promotion and marketing activities to private players based on target fulfillment criteria The product on offer need to be packaged for relevant customer segment in the target countries and the various industry participants in the value chain must co-ordinate their efforts to provide a seamless and consistent experience which is congruent with the theme. ••••••• Bombay Chamber of Commerce & Industry 12 An Integrated Approach for Promotion of Indian Tourism
  • 14. EXECUTIVE SUMMARY An Integrated Strategy : Facilitate Tourist Arrival, Stay & Movement • Visa procedures are seen as a hindrance. Countries competing with India for tourists provide visa on arrival (SriLanka, Maldives, Thailand, Nepal, Seychelles, etc.). India too should provide visa on arrival for certain categories of tourists/ for specific duration. Reputed inbound travel operators to be permitted to bring in group of tourists without any visa, subject to submission of guarantee by concerned operator By categorising the countries, India could do away/ facilitate visa requirements for certain countries Upgrade Tourism Infrastructure and address areas of prime concern (e.g. safety, security, language, cleanliness, hygiene quality of tour guides, etc.) in order to make the tourists’ experience memorable Eliminate various irritants eg. discriminatory monument entry fee for foreign tourists •••• Bombay Chamber of Commerce & Industry 13 An Integrated Approach for Promotion of Indian Tourism
  • 15. EXECUTIVE SUMMARY An Integrated Strategy : Tourism Infrastructure • The Government does not have adequate finance for the upkeep of the 3700 protected monuments and 10,000 unprotected monuments. The annual budget of Rs.156 crores amounts to a paltry sum of Rs.7600 per year per monument. Suggestions: - involve the private sector for upgrading and maintaining the key monuments of tourist interest. 38 have been identified. The Government need not spend money at all on these, e.g. The Indian Hotels Group has adopted the Taj Mahal - use Government funds to upgrade other protected monuments • Remove procedural bottlenecks for creation of tourism infrastructure. This has restricted the supply of facilities, reduced competition and made India a more expensive tourist destination than several places in S. E. Asia which offer superior facilities Since the infrastructure in the whole country cannot be upgraded simultaneously, identify and develop certain areas as ‘Special Tourism Circles’ which can be tendered to bidders from the private sector just like other infrastructure is, e.g. Telecom • Bombay Chamber of Commerce & Industry 14 An Integrated Approach for Promotion of Indian Tourism
  • 16. EXECUTIVE SUMMARY An Integrated Strategy : Pricing & Taxation • It will help if the State and Central taxes are rationalised taking into account the fact that wide difference between states create operational problems and high taxation which pushes up the pricing dampens the the growth of tourism. Tourism is price elastic. Tourism earnings could be deemed as Exports to the extent of the Net Foreign exchange earned Tax Deferment in case of ‘Currency Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned can be provided to encourage investment in tourism. •• Bombay Chamber of Commerce & Industry 15 An Integrated Approach for Promotion of Indian Tourism
  • 17. EXECUTIVE SUMMARY Organisational Mechanism for Development of Tourism Create an apex professional body modeled along the lines of ‘NASSCOM’ could be called ‘National Association for Tourism Promotion’ (NATPRO) or whatever. The Council of the ‘NATPRO’ could include senior representatives of associations of all the tourism related industries. ‘NATPRO’, can co-ordinate and act as prime catalyst to promote the interest of the tourism and related industry. ‘NATPRO’ would act as the advisory, consultative and co-ordination body for the tourism industry through representatives in various committees of the Government of India including various Ministries like Ministry of Tourism, Ministry of Finance, Ministry of External Affairs etc. ‘NATPRO’ will be a private sector initiative with Government support. Bombay Chamber of Commerce & Industry 16 An Integrated Approach for Promotion of Indian Tourism
  • 18. ACTION PLAN Action Plan - Government Action Plan - Industry 11 15 Bombay Chamber of Commerce & Industry 17 An Integrated Approach for Promotion of Indian Tourism
  • 19. ACTION PLAN - GOVERNMENT A. Strategic Initiatives by the Government 1. Recognise Tourism as ‘Priority Industry’ for the Country Government should declare Tourism as ‘Priority Industry’ like Information Technology 2. Put Tourism on the ‘Concurrent List’ of the Constitution of India 3. Give ‘Tourism’ the desired importance in economic and budgetary planning process Government should increase outlay on Tourism - currently, India spends 0.9% of GDP on Tourism Government Travel & Tourism Expenditure (%of the total GDP) India China Spain Singapore China Malaysia 0.9 3.8 9.5 9.1 7.4 5.1 France Sri Lanka USA UK Thailand Germany 4.7 4.0 3.9 2.9 2.6 3.3 4. Recognise Enormous Employment Potential of the Hotel, Travel, Entertainment, As per WTTC, the Travel & Tourism economy in India which includes all the above stated industries as well as supporting industries currently account for 17.4 mn jobs in India or 5.8% of total employment. This has a potential to rise to 25 million jobs or 6.8% of total employment by 2010. Bombay Chamber of Commerce & Industry 18 An Integrated Approach for Promotion of Indian Tourism Transport and other Allied Industries.
  • 20. ACTION PLAN - GOVERNMENT 5. Lay Down a Master Plan to implement planned and phased Development/Upgradation of Infrastructure and Areas of Tourism potential with Private sector Participation Develop ‘Special Tourism Circuits’ (like Telecom circles) ϖ Identify and create ‘Special Tourism Circles’ based on categorisation of regions depending upon selected parameters of infrastructure development index and potential. ϖ These areas could be tendered for infrastructural development to bidders from private sector, on similar basis as ‘Telecom circles’ ϖ Develop a master plan through a Special Area Development Authority constituted for the region identifying boundaries for notification and development ϖ Provide basic infrastructure in terms of roads, transport network, electrical grids, water supply etc. ϖ Facilitate private investments through fiscal incentives, removal of restrictions preventing foreign ownership and leasing of infrastructure through special legislation in these areas. 6. Taxation Policy ϖ ϖ ϖ Introduce uniform taxation across the States and do away with multiple taxation. Tourism Industry be deemed as Exports to the extent of the Net Foreign exchange earned Tax Deferment in case of ‘Currency Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned. A fixed percentage of each years’ profit can be transferred to this reserve account, subject to a monetary limit on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure. The annual contribution to such reserve should be tax deductible at the time of transfer of amount to reserve account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be released on payment of tax. Bombay Chamber of Commerce & Industry 19 An Integrated Approach for Promotion of Indian Tourism
  • 21. ACTION PLAN - GOVERNMENT B. Operational Measures as Components of the Strategy 1. Brand Indian Tourism Through Development of ‘National Tourism Logo’ Tourism needs Branding. There has to be a promise that appeals to the relevant population. Therefore, India’s National Tourism Logo’ need to be developed which represents tourist interest in India. 2. Develop an integrated long- term strategy for Marketing 2. ϖ Idetifying countries for targeting, ϖ Promoting India in the target markets identified based on a concept of promotion for India aimed at creating an ‘Indian Tourism Brand’, through ‘Theme’ promotion ϖ Develop ‘National Tourism Logo’ ϖ Adopt ‘innovative marketing strategy’ : ‘co-selling and co- marketing with key travel operators’ ϖ Introduce the concept of ‘Dollar Tourism Debit Cards’, similar to ‘pre-paid telephone cards’ ϖ Facilitate tourist arrivals, movement & stay as well as keeping the tourist occupied and interest. ϖ Strategically plan to attract investments in infrastructure Bombay Chamber of Commerce & Industry 20 An Integrated Approach for Promotion of Indian Tourism
  • 22. ACTION PLAN - GOVERNMENT 3. Recognise the Need for an Organisational Mechanism - ‘NATPRO’ ϖ Support the formation of ‘NATPRO’ (National Association for Tourism Promotion), a tourism industry initiative based on the NASSCOM. ϖ Recognise ‘NATPRO’ as the single united voice of the tourism industry Recognise NATPRO in the role of an advisory, consultative and coordinating body representing the tourism industry by including representatives of NATPRO on the committees of various Ministries concerning the tourism industry 4. Relax Visa Requiremnts ϖ Relax visa requirements and facilitate unrestricted tourist movement (domestic as well as inbound) involving removal of obsolete laws, restrictions and licence permits 5. Other Initiatives ϖ Address basic areas of concern of tourist like security, language, safety, hygiene conditions in the promotions as well as on the ground. ϖ Involve the private sector in the upgradation and maintenance of heritage sites. Bombay Chamber of Commerce & Industry 21 An Integrated Approach for Promotion of Indian Tourism
  • 23. ACTION PLAN - INDUSTRY Lobby with the Government for Tourism to be given a Priority Status ϖ Tourism is world’s largest Export Industry but South Asia, & India in particular, gets a very low share. India’s dismal performance is due to variety of reasons. It needs examination and analysis why the implementation has been elusive and in creating an enabling mechanism for proactively implementing the solutions. Promote Establishing ‘NATPRO’ (National Association for Tourism Promotion) NATPRO will be a tourism industry body, modeled on the lines of NASSCOM, as per the steps listed below: - Draw up charter for ‘NATPRO’, complete all the legal and procedural formalities, develop the organisational framework required and prepare a Business Plan - A few visionaries from the travel and tourism industry should form an Interim Council - Recruit top flight professionals and set up the elected / nominated Executive Council which replaces the Interim Council - Draw up a detailed long term action plan - Present Bombay Chamber’s White Paper on Tourism to the PMO and if possible to a group of key functionaries including Ministers from all the relevant ministries. - Through ‘NATPRO’, work in close interaction with the government in the role of an advisory, consultative & coordinating body for the tourism industry. This could be through various activities aimed at fulfilling objectives laid down. Bombay Chamber of Commerce & Industry 22 An Integrated Approach for Promotion of Indian Tourism
  • 24. ACTION PLAN - INDUSTRY Creation of ‘Special Tourism Circles’ Since it is impractical to raise the quality of infrastructure across the entire country, this paper suggests the creation of ‘Special Tourism Circles’ around anchor destinations. The ‘Special Tourism Area’ would have to be identified for development by evaluating & categorising various regions based on laid down parameters indicating extent of infrastructure development and potential for further development. Private sector may bid for infrastructural development, on a similar basis as ‘Telecom Circles’. Develop Interactive Web-site for information ϖ To help tourists select India as an attractive destination, decide on itinerary, city specific details to decide on specific activities, hotels to stay, the transport to book, etc. ϖ Interactive facility to query and get information and action such as reservation etc. ϖ To be made available in different languages of target countries. ϖ Such an initiative to pay for itself by subscription fees from industry participants (similar to the concept of ‘Tata yellow pages’). Maintenance & Development of Tourism Infrastructure Actively participate in the maintenance & development of tourism infrastructure through investments in tourism infrastructure, preservation of heritage sites by adoption etc. Bombay Chamber of Commerce & Industry 23 An Integrated Approach for Promotion of Indian Tourism
  • 25. ACTION PLAN - INDUSTRY Theme Promotion - ‘Experience India’ & ‘India Tourism Logo’ Prepare a promotion campaign based on the theme and provide support to the government for its promotion in target countries Promotion of ‘Tourism Debit Cards’ ϖ ϖ ϖ Private sector may bid for exclusive rights similar to the concept of pre-paid telephone cards and credit cards Participants may give token discounts Cost may be recovered by way of advertisements Bombay Chamber of Commerce & Industry 24 An Integrated Approach for Promotion of Indian Tourism
  • 26. WHY INDIA NEEDS TOURISM Tourism & World Trade Travel Account Balance India’s Travel Balance World Tourism India: Long Haul Destination Tourism Arrival vs. International Trade Tourist Arrival vs Country Size 18 19 20 21 23 24 25 Bombay Chamber of Commerce & Industry 25 An Integrated Approach for Promotion of Indian Tourism
  • 27. WHY INDIA NEEDS TOURISM Tourism & World Trade Tourism has the largest share in the worldwide exports of goods and services Worldwide exports of goods and services ($ bn) 600 500 400 300 200 100 0 Food Computer & Office eqpt. Automotive products Textiles & Clothing Telecommunication eqpt. Tourism Mining products other than fuels Iron & steel Chemicals Fuels 9 503 7.5 443 399 6.6 5.9 344 5.1 331 283 4.9 4.2 8 7 6 5 4 158 2.3 141 2.1 3 2 1 0 % of total worldwide exports of goods and services 532 7.9 525 7.8 Ë Tourism is one of the five top export categories for 83 % of countries worldwide and the main source of foreign currency for at least 38% of them. Ë For India, tourism earns over $ 3 bn but is the 4th largest forex earner after gems & jewellery, garments, software. Source : World Tourism Organisation India should take a holistic view to encourage the growth of Tourism rather than view it as separate pieces like aviation, hotels, airports, entertainment complexes, etc. Bombay Chamber of Commerce & Industry 26 An Integrated Approach for Promotion of Indian Tourism
  • 28. WHY INDIA NEEDS TOURISM Travel Account Balance Developing economies are benefiting more than developed economies because inbound travel dollars exceed outbound travel dollars for them. Increasing Travel Account Balance for developing countries Declining Travel Account balance for India 1477 1250 $ million 897 1997-98 1998-99 1999-00 Source : Reserve Bank of India India has not been able to benefit from this trend Bombay Chamber of Commerce & Industry 27 An Integrated Approach for Promotion of Indian Tourism
  • 29. WHY INDIA NEEDS TOURISM India’s Travel Balance Increase in the level of outbound travel has resulted in corresponding increase in the forex outflow, the rate of which is much higher than the forex inflow due to inbound travel. 1991 Total forex inflow (inbound tourism) $1842 mn. 2000 $3036 mn. % change 65% Forex outflow (outbound tourism) $434 mn. $2138 mn. 393% Net forex earned by travel industry $1408 mn. $897 mn. (36%) India’s Net Foreign Exchange Earnings from Travellers K Industry experts estimate that the travel account will become negative by 2002 if no concrete steps are taken by the government to arrest this slide. Source : Data Reserve Bank of India
  • 30. If proper steps are not taken, the travel account balance may soon become negative, thereby becoming a drain of source of precious foreign exchange. Bombay Chamber of Commerce & Industry 28 An Integrated Approach for Promotion of Indian Tourism
  • 31. WHY INDIA NEEDS TOURISM World Tourism There is a slight shift from Europe & America ( developed countries) as a prime travel destination towards developing countries, but ….. America 100% Tourist arrival (% of total) 80% 60% 61.84 40.4 60.03 60.29 59.31 Europe EAP 0.74 2.18 14.39 Middle East 3.75 0.78 2.31 14.28 South Asia 3.92 0.82 2.4 13.73 Africa 4.05 0.85 2.58 14.62 3.27 0.69 1.96 11.94 3.56
  • 32. No. of Tourists (‘000) ‘90 14959 Africa ‘95 20155 4200 12353 81355 ‘97 23205 4834 14258 88254 ‘98 24937 5219 15281 87428 ‘99 26878 5655 17157 97158 South Asia 3158 Middle East 8959 EAP 54598 America ϖ 40% 20% 20.3 19.27 18.85 18.84 18.5 Europe 282744 228382 371104 383777 394115 92799 108939 116558 119939 122874 East Asia Pacific has almost doubled the number of tourists and taken 75% of the loss suffered by Europe & USA Source Data : World Tourism Organisation 0% 1990 ϖ 1995 1997 1998 1999
  • 33. Europe & USA have dropped from 82% to 78% … East Asia Pacific region is the biggest gainer of this trend, largely because South Asia (India in particular ) has not been proactive. Bombay Chamber of Commerce & Industry 29 An Integrated Approach for Promotion of Indian Tourism
  • 34. WHY INDIA NEEDS TOURISM World Tourism The total world tourist arrivals is 664 million and the dominant destinations are Europe and America. South Asia gets a very small share. International Tourist Arrivals 1999 400 350 Million 300 250 200 150 100 50 0 Europe Americas EAP Africa Middle East South Asia International Tourist Arrivals Share of World Trade (%) -1999 Americas 18.5% Europe 59.3% EAP 14.6% Africa 4.0% South Asia Middle East 2.7% 0.9% Source : Data WTTC • International tourist arrivals cover the number of arrivals of visitors and not the number of persons Why does this happen to South Asia and India in particular ? There are 2 major reasons Bombay Chamber of Commerce & Industry 30 An Integrated Approach for Promotion of Indian Tourism
  • 35. WHY INDIA NEEDS TOURISM India : Long Haul Destination Firstly, India is a long haul destination for the key countries and long haul tourism has only 18% share of the world tourism pie Distance in km from India Share of long haul travellers in total international traveller numbers Long haul 18% USA Japan Germany UK 0 5000 6,758 6,306 7,193 10000 12,565 15000 Short haul 82% Source : Data: World Trade Organisation / World Tourism Organisation/ WWW Does this mean that India cannot become a tourism major ? Bombay Chamber of Commerce & Industry 31 An Integrated Approach for Promotion of Indian Tourism
  • 36. WHY INDIA NEEDS TOURISM Tourist Arrivals vs. International Trade Secondly, international arrivals depend upon the level of international trade. Ability to fully exploit the tourism potential will depend upon India’s ability to develop customer segment focussed strategies International trade ($ bn) (1999) 2500 2000 1500 1000 500 0 Japan Germany UK USA Norway South Africa Brazil Turkey Indonesia Thailand India 0 4.481 6.253 5.107 International trade ($ bn) (1999) 117 64 116 93 94 8.651 128 114 6.893 4.7 Hong Kong Korea Singapore Thailand India China 2.48 2 4 6 8 10 Tourist arrivals (1999) (mn nos.) 0 20 40 60 Inbound international traveller (mn nos.) (1999) Source : Business Consulting Group Analysis data from World Trade Organisation/ World Tourism Organisation
  • 37. ϖ *India needs to step up the pace of reforms to encourage global trade and international investment in India ϖ Smaller countries with high international trade have much high tourist traffic Bombay Chamber of Commerce & Industry 32 ϖ Countries with similar international trade level have implemented focussed integrated tourism strategies to exploit the potential offered by international trade ϖ India has not done that An Integrated Approach for Promotion of Indian Tourism
  • 38. WHY INDIA NEEDS TOURISM Tourist Arrivals vs. Country Size Ë The level of international trade and not size of the country is important. That is why smaller developed get more tourist arrivals than larger developing countries like India, Brazil, South Africa, etc. 80 70 France Source : Data : World Tourism Organisation / WWW Analysis : Business Consulting Group Tourist Arrivals (in mns.) 60 Spain The number of travellers coming to India is far lower than for many other countries much smaller in size than that of India. Therefore it is argued that India remains significantly under exploited as far as its carrying capacity is concerned. 50 Developed countries USA 40 30 UK
  • 39. China 20 Germany Developing Countries Australia India Brazil Ë Australia, China & South Africa have recognised this & have become very aggressive in tourism. Others like HK, Thailand, Malaysia have initiated special efforts to woo tourists Ë Dubai has gone further and has a single organisation called ‘Dubai Tourism & Commerce Marketing’ HongKong 10 Thailand Malaysia South Africa Singapore Japan Indonesia Dubai 0 Bahamas 0 2000000 4000000 6000000 8000000 10000000 12000000 Total country area (sq.kms)
  • 40. India’s tourism strategy should recognise the importance of co-promoting leisure and business tourism Bombay Chamber of Commerce & Industry 33 An Integrated Approach for Promotion of Indian Tourism
  • 41. INDIAN TOURISM INDUSTRY GROWTH ANALYSIS Inbound Arrivals Indian Tourism (Value Growth) World Tourism - Tourist Density vs Average Daily Spend Tourism Statistics Need for Strategy Changing Pattern of Consumer Spend Domestic Tourism Indian Outbound Tourism Satellite Accounting Factors Affecting Tourists - Leisure & Business 26 27 28 29 30 31 32 33 34 35 Bombay Chamber of Commerce & Industry 34 An Integrated Approach for Promotion of Indian Tourism
  • 42. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Inbound Arrivals - India The total tourist arrivals in India was 2.66 mn according to published statistics, growing at 4% CAGR over the past decade but stagnated somewhat over the last 4 years 3000 Tourist Arrivals (000. nos) 2500 2000 1500 1000 500 0 -9 2 -9 3 -9 5 -9 6 -9 7 -9 8 -9 9 -9 4 -2 0 91 92 93 94 95 96 97 98 00 -0 1 00 ϖ CAGR 4.11% ϖ Tourist arrivals actually refer to all visitors to India. This number is way below the targeted number of arrivals of 5 mn. tourists by 2000-2001. 19 19 19 19 19 19
  • 43. 19 19 19 99 20 Source : CMIE Bombay Chamber of Commerce & Industry 35 An Integrated Approach for Promotion of Indian Tourism
  • 44. INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian tourism (Value Growth) Though India’s earnings from inbound travel have shown a growth in rupee terms, they have stagnated in absolute dollar terms during the past 4 years 14000 12000 10000 8000 6000 1.50 4000 2000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 0.75 Rs. Crore 3.75 $ billion Tourist earnings ($ bn) 3.00 Tourist earnings (Rs. Crores) θ This stagnation is partly due to business travel not growing … political and business environment has not been condusive and , there have been events like riots, earthquakes, insurgency in parts of India which tarnishes the image of India from the leisure tourists perspective 2.25 0.00 Source : CMIE /GOI Department of Tourism Bombay Chamber of Commerce & Industry 36
  • 45. An Integrated Approach for Promotion of Indian Tourism
  • 46. INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS World tourism : Tourist Density vs. Average Daily Spend In addition to increasing inbound tourist traffic, there is also a need to increase the average tourist spending 120 Average spend per tourist per day ($) High ( ≥ $ 100 ) Singapore Thailand USA UK C Country Tourist density (no Average spend of tourists per sq per tourist per km of total country day ($) area) 100 80 India China Thailand USA UK South Africa (1998) Brazil Malaysia Singapore Australia Dubai 41.89 N. A 101.65 98.42 81.23 26.68 57.93 N. A 288.13 64.91 N. A 0.75 2.82 5.04 5.04 105.14 4.83 0.60 24.05 9664.86 0.58 24.02 Medium ($ 50 to $ 100 )
  • 47. Australia Brazil B 60 India 40 20 Low (< $50) A South Africa (1998) 0 Low (<1) Medium (1-5) High (> 5) Tourist density (no of tourists per square km of total country area) Source : Data : World Tourism Organisation/ country tourism body site India gradually needs to move from A to B diagonally on the graph to tourism revenues Bombay Chamber of Commerce & Industry 37 An Integrated Approach for Promotion of Indian Tourism
  • 48. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Tourism Statistics Industry experts opine that India’s tourism strategy is based on unreliable and misleading Inbound ϖ Outbound ϖ Of the 2.65 million arrivals the tourists are about 1.2 million (45% of which are leisure tourist, numbering around 0.7 million) One estimate is that the 2.65 million includes the following categories Million MLeisure tourists 7 Non-tourist arrivals from Pakistan, Bangladesh & Nepal P NRI returning to meet family i Airline staff Business visitors on tourist visas, backpackers, etc. 0.7 0.5 0.7 0.25 0.5 2.65 38 Of the 3.9 million tourist departures, genuine tourists are probably 0.4 million only. Of this group tours are probably as low as 50,000 Nearly 2 million are travelling out for their jobs in the Gulf, etc. Government & business travellers classified as tourists, Haj pilgrims, etc. probably account for 1.6 million Actual forex outgo under BTQ in 2000 was $ 379 m (RBI). If tourist departures were indeed 3.9 million, the average tourist spend would have been less than $ 100 per head per trip ! RBI statistics of $ 2139 million forex outgo on outbound travel (often quoted by tourism related publications as outbound tourism dollars) actually shows a breakdown by category of travel. Business accounts for 60% An Integrated Approach for Promotion of Indian Tourism ϖ ϖϖ ϖ
  • 49. ϖ Source : Data : Field Interviews, RBI Publications, Bombay Chamber of Commerce & Industry
  • 50. INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS India : Need for Strategy Domestic tourism is essential to balance seasonality of inbound tourism ϖ Being a long haul destination, the flow of inbound tourists is seasonal for India. Only domestic tourism can balance that to make investment in infrastructure viable Fortunately India’s domestic tourism is rising for reasons explained in the next two slides ϖ Bombay Chamber of Commerce & Industry 39 An Integrated Approach for Promotion of Indian Tourism
  • 51. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS India : Changing Pattern of Consumer Spend In India, growing disposable income over the years has led to an increase in consumption expenditure on recreation, education and cultural services, transport & communication increasing from 24% to 28%* of consumption expenditure 6.32 3.05 11.26 80% 3.38 3.05 12.27 60% 6.06 Private final consumption expenditure (% of total) 6.51 3.15 11.60 3.86 3.00 11.84 6.20 6.75 3.23 11.69 3.98 3.20 11.15 6.48 6.51 3.07 12.18 3.85 3.02 10.34 5.86 6.82 3.40 13.30 4.26 3.04 10.34 6.05 6.69 3.53 13.66 4.39 2.97 10.18 5.23 increasing 100% Item Misc. Goods & services Recreation, education & cultural services Transport & Communication Medical & Healthcare Increase / decrease (1998-99 to 93-94) + 0.37 +0.48 +2.4 +1.01 -0.08 -2.09 -0.83 -1.26
  • 52. θ 40% 54.61 20% 53.84 53.52 55.17 52.79 53.35 declining Furniture, fuel and power Gross rent, fuel & power Clothing and footwear Although these activities, conventionally considered the preserve of the classes, can now be afforded by the masses, the government’s policy initiatives have not changed. * In the case of middle and upper income groups this presents a much higher share θ 0% 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 Food, beverages & tobacco Source: Data : CMIE There are huge implications of this shift in consumption for the tourism industry Bombay Chamber of Commerce & Industry 40 An Integrated Approach for Promotion of Indian Tourism
  • 53. INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian Domestic Tourism The growth in disposable income has resulted in the total domestic tourist movement in India to more than double over a period of 7 years. θ Drivers of domestic tourism ϖ Tourist (mn. nos) Growing size of the Indian middle class with increasing levels of disposable incomes. Increasing chunk of the salaried class eligible for LTC (a tax free component) Stressful professional life and frequent need for breaks Pilgrimage Migration for employment 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 1993 90.00 CAGR 11.83% 139.13 141.78 159.88 168.20 176.08 * 127.12
  • 54. ϖ ϖ ϖϖ 1994 1995 1996 1997 1998 1999 (* Figures are unreliable, but the trend is not questionable) Source : Data : GOI - Department of Tourism Bombay Chamber of Commerce & Industry 41
  • 55. An Integrated Approach for Promotion of Indian Tourism
  • 56. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Outbound Tourism Growth in disposable incomes is also one of the major factors responsible for increase in the number of outbound tourists from India. ϖϖ ϖϖ ϖ ϖ ϖ The number of outbound tourists from India will go up further, especially due to lack of availability of well developed and reasonably priced tourist destinations within the country. Bombay Chamber of Commerce & Industry 42 An Integrated Approach for Promotion of Indian Tourism Growing size of the Indian middle class with increasing levels of disposable incomes. Lack of good, developed domestic tourist destinations as well as high cost of quality domestic travel Indian psyche & the social prestige associated with foreign travel Influence of the increasing number of movies shot overseas as also other channels in the media Aggressive promotions by foreign tourist offices in India through road shows and regular focussed trade promotions With outbound charter being allowed by the government, overseas travel will become affordable to many more Indians. Several good international destinations are cheaper than domestic holidays CAGR 6.03% Outbound Tourist* (mn. nos) 5.00 4.00 3.00 2.00 1.00 0.00
  • 57. 93 94 95 2.73 2.73 3.06 3.81 3.88 3.46 3.73 96 97 98 19 19 19 19 19 19
  • 58. (* These figures are unreliable as explained in Slide 18 but the real outbound tourist numbers have grown from a low base in 1993 to about 4,00,000 in 2000) Source : Data : GOI - Department of Tourism 19 99
  • 59. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Satellite Accounting Not only is tourism per se important for an economy but the trickle down benefits of the travel & tourism industry on the economy go beyond what is apparent . As a whole, they are too vast to be ignored Multiplier effect of tourism: K Transport Accommodation Catering Entertainment Recreation and other travel related service The secondary & tertiary effects of tourism in the form of increased purchases of Indian goods, benefits to the transport industry etc, which in turn drives the demand in the manufacturing sector & creates employment. Increased employment further drives demand due to higher disposable incomes. Travel & Tourism industry T&T Economy Food/ beverage supply, Laundry Services, Oil/ Gas supply, Wholesalers, Printing/ Publishing, Utilities, Financial Services, Sanitation Services, Furnishings & Equipment Suppliers, Security Services, Rental car, manufacturing, Transportation Administration, Tourism Promotion, Ship Building, Aircraft Manufacturing, Resort Development, Glass Products, Iron & Steel, Computers, Utilities, Concrete, Mining, Plastics, Chemicals, Textiles, Metal Products, Wood Source: WTTC The satellite accounting figures suggest that the $ 11.33 bn. T&T industry in India (2000) supported a $ 23.8 bn. T&T economy Bombay Chamber of Commerce & Industry 43 An Integrated Approach for Promotion of Indian Tourism
  • 60. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism - Leisure Tourists India’s low leisure tourist numbers (inbound as well as domestic) could be attributed to 4 major reasons Inadequate Promotion & Marketing ϖ Poor image ϖ Inadequate targetting (country & type of tourist) ϖ Concept (diffused & no continuity) ϖ Poor co-ordination between various marketeers and Government ϖ Inadequate information on several tourist destinations ϖ Potential marketing channels not exploited ϖ Major fun magnets for tourists (e.g. Disney etc. in USA, France, Japan, etc. which draw tourists by the thousands) have not been created in India Poor infrastructure ϖ Inadequate in quantity due to ϖ low investment by Government and private sector, ϖ cumbersome procedures for creating infrastructure, etc. ϖ ϖ Inadequate quality due to lack of focus on customer and poor co-ordination ϖ Poor VFM due to high taxation ϖ and high price caused by low competition ϖ Poor functioning of Railways, ϖ Government owned airlines, etc. ϖ Lack of well co-ordinated top quality tour packages (intra & ϖ intercity) with door-to-door service Restrictive Policies Cumbersome visa procedures Interstate movement of tourist vehicles Bureaucratic processes for getting clearances to set up infrastructure Hurdles for foreign ownership of tourism infrastructure Hurdles in private sector management of heritage sites (Taj Mahal is an exception) Prohibition laws in certain states Other Obstacles ϖ Perceived low safety, cleanliness, reliability ϖ Obstacles for tourists (visas, bookings, language, etc) ϖ Inadequate entertainment and shopping opportunities ϖ Poor upkeep of tourist attractions ϖ Discriminatory pricing of historical sites for foreigners ϖ Exploitative attitude of some service providers ϖ Poorly trained guides, lack of signages/ information disseminating mechanism ϖ Sudden changes in tariff and taxes affecting even pre sold tours
  • 61. Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism industry Bombay Chamber of Commerce & Industry 44 An Integrated Approach for Promotion of Indian Tourism
  • 62. INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism : Business Tourists India’s low business tourists numbers (in bound and domestic) could be attributed to Inadequate magnets to attract business groups ϖ Very few Trade Fairs to attract business tourists (except a few at Pragati Maidan) unlike, say for example, Germany which holds 2/3rd of all major international trade fairs & attracts 1.8 mn tourists from outside Germany alone. ϖ Lack of nightlife & entertainment ϖ Since India remains largely isolated from global trade (nonconvertible currency, low foreign trade, severe restrictions even for transit of goods, etc.) international business tourists do not need to visit India Inadequate facilities for business conventions ϖ India is not equipped to handle very large international business conventions unlike destinations in USA, Europe & East Asia Pacific ϖ Even for smaller conventions, facilities exist only at a few 5 Star hotels in a few locations ϖ Other competing countries in Asia are able to offer better value packages Attitude towards potential business investors ϖ Barring a few notable exceptions, the business traveller to most parts of India faces a disinterested bureaucracy, inadequate information, an attitude that smacks of being given permits as a favour and not as a welcome guest The 4 reasons listed for leisure tourists ϖ Same as for leisure tourists Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism industry 45 An Integrated Approach for Promotion of Indian Tourism Bombay Chamber of Commerce & Industry
  • 63. AN INTEGRATED STRATEGY Strategic & Operational Initiatives Influence & Facilitate Tourist Decisions Branding & Marketing Strategy Facilitate Tourist Arrival, Stay & Movement Tourism Infrastructure Pricing & Taxation 37 38 43 49 56 59 Bombay Chamber of Commerce & Industry 46 An Integrated Approach for Promotion of Indian Tourism
  • 64. AN INTEGRATED STRATEGY: STRATEGIC AND OPERATIONAL INITIATIVES Tourism as a Priority Industry Strategic & Operational Initiatives Operational initiatives ϖ Strategic initiatives ϖϖϖ Operational measures aimed at improving the operational efficiency by focussing on infrastructural constraints & how best can the existing infrastructure be better utilised with the available resources Tours to be packaged for relevant customers as one complete experience Brand Indian Tourism through development of ‘National Tourism Logo’ Government should declare Tourism as a Priority Industry as Software industry Put Tourism on the Concurrent list of the Constitution of India Government should increase outlay on Tourism: India spends only 0.9% of GDP on Tourism as compared to 49% in most other countries Lay down a master plan to implement planned & phased development / upgradation of infrastructure & areas of tourism potential with private sector participation Policy initiatives for the same aimed at improving the operational efficiency by focussing on infrastructural constraints and optimising existing infrastructure with the available resources 47 An Integrated Approach for Promotion of Indian Tourism ϖϖ ϖ ϖ
  • 65. Bombay Chamber of Commerce & Industry
  • 66. AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs India should focus marketing efforts on just six countries Country target ϖ International tourism expenditure % (1998) USA 12.7% Germany 10.6% Others 50.0% Japan 6.5% UK 7.3% France Canada Italy 4.0% 2.4% 4.0% Netherlands 2.5% There is a clear need for focus on a limited number of countries because India’s financial resources for marketing are limited. India should focus on just six countries (USA, UK, Germany, Japan, France and Italy) which account for 53% of the outbound tourists and 45% of the world tourism expenditure. That will be all long haul tourists. To counter balance their traffic seasonality India needs to look for load from some special segments of those countries and other source countries. In the target countries, India needs to have a ‘push-pull’ strategy which will pull potential tourists to travel agents and tour operators and incentivise the travel trade to push for India since they play a big role in helping a tourist to decide on the destination, itinerary, planning, etc. 45% ϖ International tourism supply % (1998) USA 14.8% Others 41.6% Germany 12.4% Japan 7.6% UK 8.5% France 4.7% Push-Pull Strategy ϖ
  • 67. Canada 2.8% Netherlands 2.9% Italy 4.7% 53% Source Data : World Tourism Organisation Bombay Chamber of Commerce & Industry 48 An Integrated Approach for Promotion of Indian Tourism
  • 68. AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs We need a clear and distinct strategy for each country ϖ In those few countries there is a clear need to have detailed market research data which identifies the consumer segments for which a long haul travel will be relevant, understand the socio-economic profile, demographic profile and tourism interests and habits of each segment. Without that marketing efforts could go awry. For instance: USA East Asia 29% ϖ American outbound tourists American outbound tourists Govt./Military 2% Craftsmen/ factory 3% Clerical/ sales 4% Homemaker 5% Others 2% Manager/ Executive 31% Religion/ pilgrimage 2% Study/ teaching 2% Convention conference 2% Asia 2% Middle East 5% Africa 2% VFR 39% Central America 3% South America 8% Europe 51%
  • 69. Student 6% Professional/ technical 38% Retired 9% Business 28% Leisure/ recreation/ holiday 27% Purpose Destination Country Source : Data : Travel Industry Association of America Occupation ϖ These statistics suggest that 36% visit East Asia Pacific, South Asia and the Middle East but only 2% head for South Asia. Would it be possible to club India with a trip to East Asia (29%) through suitable incentives and marketing? Many of them travel in Aug / September when it rains heavily in many parts in India. Which destinations should India market in August / Sept? Others travel around Christmas, New Year. 49 An Integrated Approach for Promotion of Indian Tourism Bombay Chamber of Commerce & Industry
  • 70. AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs Each of India’s target countries will have its own characteristics and each relevant segment within it will have its own idiosyncrasies. Example : Japan Japanese outbound tourists Japanese outbound tourists Other New Zealand 23% 1% Australia 5% Europe 13% Hong Kong 5% 50-59 years 16% Korea 10% China 6% Taiwan 5% USA 32% over 60 years 12% 0-4 years 3% 10-19 years 5% 40-49 years 17% Individually Arranged 29% Group Travel 11% Others 7% 20-29 years 28% Package Tours 53% 30-39 years 19% Destination Country Source Data : www.tradeport.org ϖ Age Profile of Outbound tourist Type of Travel Most Japanese travel around end Dec - early Jan, the Summer OBON (around August 15) and the Golden week (April - May). They take short vacations and head largely to Korea, Taiwan, Hong Kong, China and USA (where Hawai is the key destination). The rest of America and Europe have a good mix of leisure, student and business travel. India neither fits in as a leisure spot nor a business magnet. The Japanese traveller is not as religious as he is made out to be. If India has a Buddhist trail to offer, the target is probably the ‘over 60 year old’ Japanese who account for 12% of the Japanese outbound tourist. What are this segment’s specific needs for mode of travel, type of experience, food requirements, cleanliness requirements, tour guide and other facilities? Unless this is known, marketing India to Japan may be a waste of money 50 An Integrated Approach for Promotion of Indian Tourism Bombay Chamber of Commerce & Industry
  • 71. AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs A clear strategy is required for the other target countries as well ϖ The Germans, French and Italians are known to be travel-friendly and may seek warm destinations in July-August. Neighbouring countries like Maldives and Sri Lanka have exploited their beaches to lure tourists from these destinations with well co-ordinated strategies. India for some reason, has restricted tourist arrivals in the Lakshadweep which is next door. Barring Goa, the much talked about beautiful coast line brings in more drift wood than tourists. The beaches of Thailand, Malaysia and Indonesia take in tourists by the millions, whereas the Andamans and Nicobar remain largely ignored …. and probably intentionally, due to the Governments perceived security threat. We need to realistically assess whether islands around India are particularly vulnerable, whereas it is not so for the rest of the world. India should focus on relevant consumer segments in a few focussed countries and offer all the attractions that are relevant to them based on serious market research Bombay Chamber of Commerce & Industry 51 An Integrated Approach for Promotion of Indian Tourism
  • 72. AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target NRIs Persons of Indian Origin should be targeted • It is estimated that there are over 20 million NRI’s the world over . Only 3.5% travelled to India last year, even if it is wrongly assumed that there are no multiple trips. The 1987 statistics reveal that of the 12.5 million Indians living abroad, two thirds were in other Asian Countries who would tour India without much prodding if there are interesting and economical tourist packages. It is significant that there may be more than 3 million Indians living in the 6 target countries for world tourism. They are known to travel like others living in the country of residence, to various parts of the world. There is a case for motivating them to visit their roots through a targetted marketing strategy because anecdotal evidence suggests that the second and third generation NRIs have little desire to travel to India due to loss of roots. If they travel to India and have a good experience, they are likely to become better brand ambassadors for Indian tourism in their country of residence than many others. Location of Persons of Location of Persons of Indian Origin Indian Origin Middle East 8.5% Africa 13.4% Oceania & Indonesia 3.7% America 13.1% Europe 7.7% Source Data : Statistical Outline of India 1992-93 • Asia 53.5% • The opportunity exists. Bombay Chamber of Commerce & Industry 52 An Integrated Approach for Promotion of Indian Tourism
  • 73. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Product Packaging Tours should be packaged for the relevant customers as one complete experience. • India no doubt, has several good hotels, at least one good domestic airline, one good rail experience for tourists, many good beaches, several outstanding historical monuments, entertainment spots, several brilliant people in the travel & tourism industry with good ideas, a well intentioned tourism ministry. But put these in the chain from travel booking to visit to return to home country & what you get is a mixed experience, with service gaps, joy killers and some delightful movements. Even to connect these islands of excellence requires someone to co-ordinate all the linkages. This need not be the case if a tour is understood to be a complete experience and is served as a one single continuum. The Kerala package offered by a five star hotel group and a private airline is an outstanding example of what can be done to create a great tourism experience for domestic or international tourists. Bombay Chamber of Commerce & Industry 53 An Integrated Approach for Promotion of Indian Tourism
  • 74. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Branding Indian tourism needs Branding that will reflect the experience that the tourist can expect ϖ Tourism needs branding no less than any consumer product. There has to be a promise that appeals to the relevant population. There has to be a theme/ logo that is relevant and one that can be actually experienced during the visit. Several countries have adopted certain themes and positioned tourism in their countries in a manner that attracts the target segments. See the box alongside. ‘Experience India’ a joint initiative of the private sector and the Government appears to be a step in the right direction. A theme for marketing India could emerge from it. The ‘Maharaja’ logo could represent the tourists’ experience in India. Various organisations in the tourism business should be allowed to use the Indian Tourism Logo provided they adhere to certain norms and policies that are laid down. Thailand - “Land of Smiles” Malaysia - “Malaysia truly Asia” Mauritius - “1% water, 99% fun” Maldives - “The sunny side of life” Dubai - “Discover Dubai” Srilanka - “A land like no other” Seychelles - “Seychelles magic” ϖ ϖ Bombay Chamber of Commerce & Industry 54 An Integrated Approach for Promotion of Indian Tourism
  • 75. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Multi-channel approach to promotion of the concept of Indian tourism using a unified theme for promotion Channel Dollar Debit Cards Approach to promotion/ information dissemination Debit cards can be issued to Foreign tourists on payment in foreign exchange by approved agencies e.g. Forex Dealers, select tour operators, etc. ‘Debit Cards’, to be acceptable for all tourism related purposes - air, train, hotel and restaurants, monument entry, shopping etc. Companies who participate, will have to provide the necessary infrastructure to handle debit cards, give token discounts/ facilities and portray the ‘Tourism Logo’ at their company premises. A booklet giving names of all participant agencies will have to be provided to the tourists on purchase of’ ‘Debit Cards’. The cost of this ‘Debit Card’ should be recovered through advertisements Popularity of Indian cuisine overseas is undisputed. At peak hours there is considerable waiting time at a majority of these restaurants. This waiting time could be utilised to promote India as a tourist destination by screening of theme videos & disseminating information through information kiosks. This also ensures that the promotion is addressed to the right audience. Select Indian restaurants in target markets should be tapped Bombay Chamber of Commerce & Industry 55 An Integrated Approach for Promotion of Indian Tourism
  • 76. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Concept of co selling / co marketing with key operators Approach to promotion/ information dissemination Underwriting the media costs of promotion. This would not only incentivise the tour operators to promote India as a destination amongst the tourists but also help depict India much more prominently in the media (brochures, information booklets, billboards etc.) Identifying destinations of high tourist traffic in the same region as India and pursue tourists coming to these destinations to come to India through attractive fares, targeted promotions. Plan joint charter flight with neighboring SAARC countries like Nepal, Sri Lanka, Maldives on one leg of their journey and take Indian destinations like Goa, Agra, Jaipur on the other. Offer attractive fares for tourists visiting South East Asian countries (could be to visit Andaman & Nicobar islands) Plan joint promotional initiatives with Indian and other willing carriers & promote India as a tourist destination. Outsourcing promotion and marketing activities in the target countries to private players with periodic targets to be fulfilled by the agency. This would also help provide much needed accountability towards fulfillment of targets. It is not practical to expect the Government of India’s Tourism Department alone to get the required reach 56 An Integrated Approach for Promotion of Indian Tourism ϖ Airline Schemes ϖ ϖϖ Outsourcing promotion and marketing activities in the target countries ϖ Bombay Chamber of Commerce & Industry
  • 77. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Approach to promotion/ information dissemination World Wide Web site for information and action ϖ An interactive website that carries the India brand, conveys the proposed theme, and helps tourists with all kinds of information which will help a tourist from all the relevant segments in the target countries to know all that is relevant to select India as a destination, decide on the itinerary, city specific details to decide on the specific activities, the hotels to stay in, the transport to book, the shopping that can be done, the entertainment available, etc. Interactive facilities to query and get information or action such as reservation, etc. There are websites in India which partially meet these requirements or deal with just one state. A comprehensive effort is called for, with hyperlinks to the service provider sites. It should be available in the languages of the target countries. Such an initiative could be made to pay for itself by subscriptions fees from industry participants. PIO’s/ NRI’s can serve as goodwill ambassadors for the country. With the increasingly large number of Indians overseas and their knowledge about the country, they can be a good source of promotion. The expatriate community is very strong overseas. They have a lot of community activities and celebrations during various Indian festivals. These can be used to promote India as a tourist destination amongst the people interested to know more about India and its culture. 57 An Integrated Approach for Promotion of Indian Tourism PIO’s/ NRI’s in overseas countries ϖ Bombay Chamber of Commerce & Industry
  • 78. AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Approach to promotion/ information dissemination Expatriates in India (includes foreign consulates in India) Indian consulates abroad Business Travelers visiting India Media/ sports celebrities Incentivising tour operators Mass media (TV, radio, movies etc) ϖ Expatriates could be a very good source of promoting India as a tourist destination to a large overseas destination. For this, the domestic tourist destinations should be promoted aggressively within the expatriate community. Indian consulates abroad could be used as a medium of information dissemination / promotion Business travelers, if provided with a good experience, could serve as an excellent word of mouth publicity for India. India has always attracted celebrities from the west who are in search of spiritual solace. These people could be not only targeted for promotion but also they could be used as a channel to promote India as a tourist destination. Tour operators could be incentivised lucratively for selling packaged tours to India Establishing contacts with TV program producers, travel writers, adventure societies, religious groups, film producers (to encourage them shoot in India) ϖ ϖ ϖ ϖ ϖ Bombay Chamber of Commerce & Industry
  • 79. 58 An Integrated Approach for Promotion of Indian Tourism
  • 80. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance Having identified target countries remove obstacles Situation ϖ Suggestions ϖ Indian missions are located in a few cities in the overseas countries. Tourists willing to tour India need to get a visa for which either they have to personally travel to the city where Indian mission is located or send their passport to the Indian mission through post or some other form of delivery. For example a tourist in Manchester has to either send his passport to Edinburgh or personally go there in order to obtain a visa. Individuals are not very comfortable parting with their passports. Visa on arrival for certain categories of tourists/ countries at least for a limited duration of stay. Facilitate entry of foreign tourists, visiting India in large groups, by allowing inbound travel operators to bring these tourists into India without any visa requirements on the guarantee of the tour operator. This facility can be extended only to reputed tour operators with an established track record. ϖ ϖ Bombay Chamber of Commerce & Industry 59
  • 81. An Integrated Approach for Promotion of Indian Tourism
  • 82. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance Visitors/ tourists of all nationalities (except Nepal) require visas for visiting India Nationality American Australians British Canadian European/ Other Indian Bangladesh Nepal Singapore Sri Lankan Japanese Nepal Y Y Y Y Y No Y NA Y Y Y India Y Y Y Y Y NA Y No Y Y Y Sri Lanka Maldives # Bangladesh @ No No No No No No No No Y No No No No No No Yes No No No NA No No No No No No No Y NA No No Y Y Singapore No No No No No Y No No NA No No Japan No Y No No No Y Y Y No Y NA Canada No No No NA No Y Y Y No Y No Greece No No No NA NA Y Y Y No Y No UK No No NA No No Y Y Y Y Y No Australia * Y NA Y Y Y Y Y Y Y Y Y USA NA Y No No No Y Y Y Y Y No * Australia is ETA - Electronic Travel Authority # Visa on arrival on presentation of health papers @ For items marked ‘No’ visas are issued on arrival at Colombo Airport Source : WWW Visa on Arrival is available in countries like Bhutan, Sri Lanka, Nepal, Singapore, Seychelles, Maldives, Macau, Thailand, Turkey, Taiwan, etc. who are competing with India for tourists Bombay Chamber of Commerce & Industry 60 An Integrated Approach for Promotion of Indian Tourism
  • 83. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance By categorising countries, India could do away/ facilitate visa requirements without compromising security concerns Country Category Visa Criteria Identified markets for promoting India as a tourist Category 1 destination in terms of tourists interest, disposable No visa requirements income, historical data e.g. USA, select European countries, Japan, etc. Category 2 Tourists from countries seen as a potential hazard from the point of health or some other factors e.g. African countries, Middle East, etc. Category 3 Tourist from countries seen as a potential risk in terms of illegal migrants, national security, e.g. Afghanistan, Pakistan, Bangladesh etc. Visa on arrival based on laid down criteria (presentation of required documents, certificates, etc.) Stringent visa requirements in the interest of issues like national security, illegal migration, etc. Bombay Chamber of Commerce & Industry 61 An Integrated Approach for Promotion of Indian Tourism
  • 84. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Remove Obsolete Laws Without Compromising Security Obsolete laws & restrictions obstruct tourism. Indian visitors have to procure permits to go to some parts of the North Eastern region due to the enforcement of ‘Inner line permits (ILP’s)’ in some hilly states. Restricted area permits for foreign tourists to be procured in addition to visa requirements. Restrictions like prohibition of photography on dams & installations like All India Radio (AIR) stations could be done away with after proper assessment of security & related issues. The recent rule requiring Indian citizens to report their foreign visitors to the nearest police station if they stay more than a certain number of hours is another case of unrealistic policy. Bombay Chamber of Commerce & Industry 62 An Integrated Approach for Promotion of Indian Tourism
  • 85. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Infrastructure - Soft Issues Need to address negative impressions about India ϖϖϖ Security Language Quality of tour guide Safety standards Quality of lodging & boarding Cleanliness & hygiene conditions ϖ It is very important for India to deal with problems and also address misinformation in their promotions too. Lack of information could result in the tourist decision being influenced by adverse media reports which may talk about some trouble/ calamity in some state of India which may not even be of concern to the tourist since he may be visiting some other state albeit within India. The fact that India’s cultural & geographical diversity is so vast that some trouble happening in Kashmir or some natural calamity in Orissa does not in any way affect the tourist planning to visit Rajasthan. The international image of India is that of a country that epitomies poverty, poor hygiene & low safety standards. There is always a fear within the tourists that they would contract some disease when they visit India. This needs to be countered. Stray experience of being taken for a ride gets blown out of proportion. This needs to be curbed but that alone does not keep tourists away from India. How does Italy with a similar reputation, get tourists? ϖ ϖ ϖ
  • 86. ϖ ϖ ϖ ϖ Bombay Chamber of Commerce & Industry 63 An Integrated Approach for Promotion of Indian Tourism
  • 87. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Maintenance of Heritage Sites Like Italy and Greece, India too, can attract tourists to our monuments / heritage sites Ground realities/ facts/ Issues : ϖ The need ϖ India has 3700 protected monuments and 10000 unprotected monuments. Archaeological Survey of India. Does conservation, illumination, penetration, creating public facilities, and publications/ promotions. ASI’s annual budget is Rs. 156 crores i.e. Rs. 7600/- per monument per year (after providing for salaries and expenses of the ASI). This amount is not at all sufficient to fulfil even the basic preservation and maintenance of monuments and sites. ϖ Restoration and maintenance of world heritage structures and the surroundings like approach roads, non ticket areas etc. Ensure that people other than tourists (beggars, urchins, encroachers etc) do not get inside the monument premises. Provide a safe and secure environment to enable the tourists to have a memorable experience inside the monument. No amount of increase in gate collections will solve the problem 38 sites have been identified. Get the private sector to participate in funding (and managing the property if possible) ϖ ϖ
  • 88. ϖ Source : Data : India Today 9th July, 2001 Bombay Chamber of Commerce & Industry 64 An Integrated Approach for Promotion of Indian Tourism
  • 89. AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Preserving Heritage Sites Preserving the participation. heritage of India closer government private sector Action Plan : List of 38 sites prepared, which are in need of fiscal support. Sites include the likes of Ajanta/ Ellora, Fatehpur Sikri, Hampi, Red Fort, Alchi monastery Ladakh. Start action with private sector help quickly Govt. benefits from increased tourist turnout : - Benefit to the local economy and the country as a whole. An ideal way to solve out regional economic balance - Prevent heritage property from falling to pieces - Can avail of best possible advice and services of experts in the fields of restoration and conservation
  • 90. Private sector benefits : - Guarantee mileage at the site like signages, etc. - Use of monument’s image in their advertisements - Private players have a say in the management of their money - Corporate and individual donations under ‘Adopt a Monument’ scheme, eligible for full income-tax exemption as also other benefits which may be site or project specific Source : Data : India Today 9th July, 2001 Bombay Chamber of Commerce & Industry 65 An Integrated Approach for Promotion of Indian Tourism
  • 91. AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles Since it is impractical to raise the quality of infrastructure across the whole country ‘Special tourism circles’ could be developed around anchor tourist destinations and promoted under a unified theme of India. ϖ Specific products, (represented by destinations) covering various interest areas to be identified alongwith anchor destinations in a number of regions for development. The anchor destinations and the surrounding ‘destinations’ representing the products should be classified as ‘Special Tourism Circles’. ϖ ϖϖ ϖ ϖ ϖ ϖ ‘Special Tourism Circles’ should satisfy the needs of a variety of needs of target tourist interest groups by offering a mix of conventional & contemporary destinations & activities. Personalization & individualization of itineraries wherein the tourists should be able to pick & choose, to suit individual tastes, from a basket of offerings. Each designated area should be provided with full fledged infrastructure facilities. Package of monetary & financial assistance/ incentives for private participants should be conceived to provide impetus to tourism. There is no need to prevent foreign ownership or
  • 92. leasing of infrastructure. The anchor tourist destination for each ‘Special tourism Area’ should be the focus of all promotions & should serve as as gateway city for that particular ‘Special Tourism Circle’. ‘Special Tourism Circle’ should specifically address basic areas of concern of inbound tourists like safety, security, hygiene & cleanliness etc., should be kept clear of beggars Concept of ‘Project in the Box’ wherein tourism & related projects are cleared subject to the parties agreeing to comply to a given set of regulatory conditions. The final objective for this is to be able to offer & deliver to the tourist, an ‘Experience’ comparable to the best in the world & not a destination Bombay Chamber of Commerce & Industry 66 An Integrated Approach for Promotion of Indian Tourism
  • 93. AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles Various regions within India need to be evaluated for potential of developing them into ‘Special Tourism Circles’. ‘Special Tourism Circles’ should be selected after evaluating the regions in terms of the ‘Infrastructure Development Index’ & ‘Potential for Exploitation’ which should be based on the following parameters: ϖ Carrying capacity of the region (in terms of number of tourists) ϖ Connectivity/ infrastructure (tourist specific/ general) ϖ Extent of investment required for building/ upgrading the necessary infrastructure to world class levels. ϖ The attractiveness of returns in terms of return on capital employed, time for breakeven etc (tourist specific/ general infrastructure) ϖ Assessment of the region (in terms of safety, manpower availability, tourist interests it can satisfy) ϖ Popularity amongst the domestic tourists ϖ Identify boundaries for these areas for necessary notification ϖ Master plan for the area for the purpose of development ϖϖ Develop & allot land for hotels & tourism related services at reasonable rates To constitute Special Area Development Authority Facilitate private sector participation through fiscal incentives & by allowing private companies to bid for development rights in various circuits/ areas which could cover various tourism related infrastructure Bombay Chamber of Commerce & Industry 67 An Integrated Approach for Promotion of Indian Tourism
  • 94. AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles Based on such evaluation we would have four categories of regions for development. Some places in each cell need to be identified High Infrastructure Development Index Regions already exploited like the Golden Triangle 1 2 Goa Kerala There needs to be different strategies for each of the three categories. Policies should facilitate relevant action on the ground by hotels, airlines, tour operators, etc. The overall game plan is to move places in category 3 to 2, and then to category 1 over a period of time by planned development of domestic and inbound tourism. This paper does not seek to classify individual regions. That requires a detailed study. The places mentioned in the cells are merely illustrative 4 3 Low priority for tourism
  • 95. North East Andaman & Nicobar Low Low Potential for further exploitation High Goa & Kerala, for instance, could provide the platform for the government to start promoting tourism on the international scene Bombay Chamber of Commerce & Industry 68 An Integrated Approach for Promotion of Indian Tourism
  • 96. AN INTEGRATED STRATEGY : PRICING & TAXATION Pricing High cost of tourism in India despite indifferent infrastructure is a result of high taxation and inadequate competition. ϖ Restrictive policies and the maze of permits / clearances that are the legacy of the licence Raj continue to hamper the travel and tourism industry. This naturally reduces the infrastructure on the ground and leads to higher pricing due to shortage. Multiplicity of taxes, high licence fees, etc. raise the cost of hotels and travel services. It is a case of the Central and State Government killing the goose that lays golden eggs. Much more can be earned by taking inbound travel to India from the measly 2.6 million per year to 5 times that (China : 27 million, Turkey : 7 million, Thailand : 9 million) than by charging 30-40% taxes which stunt the industry. One should not forget the domestic tourists (including business) who automatically cut down on such expenses. Government should look at the elasticity of demand for tourism and not do simplistic revenue budgeting. Discriminatory pricing of air travel, entry to historical sites and sanctuaries weighed against foreigners is not taken to kindly. We are well within our rights to do so, but the question is, what message does one want to convey to foreign tourists? ϖ ϖ Tourism demand is price elastic Bombay Chamber of Commerce & Industry 69 An Integrated Approach for Promotion of Indian Tourism
  • 97. AN INTEGRATED STRATEGY : PRICING & TAXATION Taxation Policy Tax Deferment through creation of a ‘Currency Fluctuation Reserve’ The Tourism Industry, one of the largest foreign exchange earners for the country. Income from Tourism in Foreign Exchange should be ‘Deemed as Exports’. It is crucial for the country to enhance foreign exchange reserves. As an incentive, Government should permit the Tourism and thousands of related industries to create “Foreign Exchange Fluctuation Reserve” to the extent of Net Foreign Exchange (NFE) earned. A fixed percentage of each years’ profit can be transferred to this reserve account, subject to a monetary limit on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure. The annual contribution to such reserve should be tax deductible at the time of transfer of amount to reserve account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be released on payment of tax. This tax deferment will provide financial support to the Foreign Exchange earner to meet any foreign exchange risks, which may arise and improve their margins to some extent. At the same time the Government will get its tax revenue, though after a specified period. A similar incentive mechanism was operating earlier for investment in plant & machinery as “Development Reserve”. Tourism Industry could be ‘deemed as Exports’ to the extent of Net Foreign Exchange earned’ by the Industry Bombay Chamber of Commerce & Industry 70 An Integrated Approach for Promotion of Indian Tourism
  • 98. Organisational Mechanism For Development of Tourism Government & Industry to Unite Strategically Possible Models Why a Professional Body ? - ‘National Association for Tourism Promotion’ (NATPRO) ‘NATPRO’ - Aims and Objectives Action Steps for ‘NATPRO’ 64 65 61 62 63 Bombay Chamber of Commerce & Industry 71 An Integrated Approach for Promotion of Indian Tourism
  • 99. ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Strategic Government & Industry Partnership Strategies & policies for development of Tourism in India requires an effective body for co-ordination between government and industry Issues ϖ Action areas/ decisions concerning the tourism industry are out of the jurisdiction of the Ministry of Tourism & involves other ministries as well. (such as the Ministry of External Affairs, Ministry of Finance, Ministry of Urban Development, Home Ministry, Ministry of Environment at the centre and various Ministries and Departments at the State level). They often retard or work at cross purposes despite the best intentions. Policy initiatives by the GoI through a series of National Tourism Policies as well as fiscal incentives like tax breaks etc. have failed to bring life to this industry primarily due to lack of any action at the ground level There is a clear need to build & sell the brand of Indian tourism worldwide but there is no single body depicting the united face of the tourism industry in India Presently, the tourism industry is represented by a large number of associations/ bodies. These associations / bodies are either a part of a larger industry body or are tourism industry related trade bodies (either an industry association or a trade body). Each association/ body works independently with its own agenda. e.g. ASSOCHAM, FICCI, CII, IATO, TAAI, FHRAI, apart from Bombay Chamber of Commerce & Industry None of the bodies currently monitor, maintain & update detailed reliable data related to the tourism industry ϖϖϖ ϖ The need is for a mechanism whereby development and implementation of various strategies & policies are ensured. Bombay Chamber of Commerce & Industry 72 An Integrated Approach for Promotion of Indian Tourism
  • 100. ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Possible Models There are three models for developing a unified body to represent the tourism industry Federation of the various trade Associations that belong to Travel and Tourism ϖ Danger of getting labelled or positioned as yet another trade body for lobbying, a constant internal tussle for turf for prioritisation of issues, etc.are the inherent dangers of this model ϖ A co-ordinated panel of the Tourism cells of CII, FICCI, Assocham, etc. is not being considered because these association do not as yet have a track record of joint working except on specific issues. ϖ What is required is a fully operational organisation and not a panel, and it needs to be headed by people who will rise above the sectarian interests of one trade or the other, even if they belong to one Board of Tourism Development in India ϖ Not recommended because in India, Boards tend to be quasi Government bodies with a good charter but little power or funds to provide action. The organisational format too is not conducive. e.g. Coffee Board, Rubber Board, Tea Board, etc. ϖ However, the Singapore Tourism Promotion Board and Dubai Tourism are outstanding examples of success A NASSCOM like format with industry leaders working in close touch with the Government ϖ A fully professional private sector initiative with a functioning organisation with clear objective and plans ϖ What NASSCOM did for the IT sector can be done for the tourism sector ϖ The GOI understands this model and can be persuaded to support it For convenience, the suggested body is referred to as NATPRO Bombay Chamber of Commerce & Industry 73 An Integrated Approach for Promotion of Indian Tourism
  • 101. ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Why a professional body - ‘National Association for Tourism Promotion (NATPRO)’ Prima facie there is a case for the creation of ‘National Association for Tourism Promotion (NATPRO)’ an apex professional body which can coordinate & promote the interest of the tourism industry with a single voice Why a professional umbrella body for the Tourism industry ? ϖ There is a need to co-ordinate the needs and activities of the various trade bodies on the one hand and co-ordinate the actions of various ministries which act independently but impact the tourism business The option of vesting of all possible powers / responsibilities related to the tourism industry with a single ministry is also not a practical solution, because of the nature of issues involved. Will effectively function as an apex body representing all the major tourism industry related trade Associations. Therefore a full time professional body is required to deal with issues and work for Indian tourism in a co-ordinated manner. ϖ ϖ ϖ Such a body would act as the prime catalyst for the growth of tourism & related industry. Bombay Chamber of Commerce & Industry 74 An Integrated Approach for Promotion of Indian Tourism
  • 102. ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM ‘NATPRO’ - Aims and Objectives The Government needs to encourage the creation of such a body as it will complement the role of the Tourism Ministry Aims & Objectives of ‘NATPRO’ ϖ Vision and Strategy: Build a brand of Indian tourism & work towards building & delivering what the brand promises to offer ϖ Maintain close interaction & work actively with the GoI in formulating National Tourism Policy & other related issues ϖ Maintain & disseminate information & statistical database of tourism & hospitality services related activities ϖ Take effective steps to create awareness about the economic & social benefits of tourism ϖ Promote the concept of travel as a leisure activity domestically. ϖ Encourage members to provide world class quality products & services by laying down industry standards of service, manpower quality & infrastructure. ϖ Actively help in the development of tourism related service infrastructure by assuming the role of certifying/ accreditation body for various tourism industry related vocation & training institutions. ϖ Provide an ideal forum for overseas & domestic players to explore the vast potential of Indian tourism through joint ventures, strategic & marketing alliances, joint product development by organising business meets with delegations of various countries. ϖ Provide members with opportunities to participate at major tourism events across the world & organise tourism events in India. Involve membership participation in various forums on subjects like HRD, Export, Food & Nutrition, Housekeeping etc. Act as advisory, consultative and co-ordination body for tourism industry through representatives in various committees of the Government of India including various Ministries like Ministry of Tourism, Ministry of Finance, Ministry of External Affairs etc. The government should be convinced on the need & utility of such a body to partner the Tourism Ministry Bombay Chamber of Commerce & Industry 75 An Integrated Approach for Promotion of Indian Tourism
  • 103. ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Actionabl;e Agenda - ‘NATPRO’ Action steps for the setting up of a NATPRO ϖ A few visionaries from the travel and tourism industry who enjoy respect within their respective trade bodies and the Government should form an Interim Council The Interim Council should make a presentation of BCCI’s White Paper on Tourism to the PMO and if possible to a group of key functionaries including Ministers from all the relevant ministries. The objective of which will be a) to get the Government of India to incorporate some of the suggestions in the proposed tourism policy b) to get the Government of India to bless the formation of NATPRO ϖ ϖ With the help of an initial corpus, the Interim Council should get the charter for NATPRO drawn up, complete all the legal and procedural formalities for creating NATPRO, develop the organisational framework required and prepare a Business Plan Presentations to the Trade Bodies for a ‘buy-in’ and to start the membership drive Recruitment of top flight professionals and setting up of the elected / nominated Executive Council which will replace the Interim Council NATPRO to prioritise activities for the first 6 months and to develop a detailed action plan ϖϖ ϖ Bombay Chamber of Commerce & Industry
  • 104. 76 An Integrated Approach for Promotion of Indian Tourism